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Per Curiam.
Plaintiff suffered a heart attack on November 19, 1971, which arose out of and in the course of his employment with defendant City of Grosse Pointe Park Fire Department. Benefits under the Worker’s Disability Compensation Act (WDCA) were paid voluntarily by the fire department’s workers’ compensation insurance carrier, defendant Royal Globe Insurance Company, in the amount of $90 per week beginning November 20, 1971.
Plaintiff retired from employment with defendant on July 15, 1972, and began receiving his duty-disability pension in the amount of $259 per month as of that date. This amount was subsequently raised to $280 per month within two to three years.
On October 24, 1975, defendant ceased payment of workers’ compensation benefits on the ground that plaintiff was receiving a duty-disability pension from the City of Grosse Pointe Park. Plaintiff’s pension payments ceased in December of 1977 since the salary from his employment with the Department of Army surpassed the cap set by the pension plan. In the event that his salary were to fall below the cap, his entitlement to pension payments would resume.
Plaintiff filed a petition for hearing in December, 1975, in an effort to regain workers’ compensation benefits. The hearing referee granted plaintiff’s request, rejecting defendant’s argument that plaintiff was not entitled to both workers’ compensation benefits and duty-disability pension payments pursuant to the "like benefits” provision of MCL 418.161; MSA 17.237(161).
On appeal, the Workers’ Compensation Appeal Board disagreed, concluding that the disability pension payments were indeed "like benefits” and thus plaintiff would be entitled to only the pension payments or the workers’ compensation benefits, but not both. The appeal board additionally held that plaintiff had made an effective election of workers’ compensation benefits at the proceeding below thus affirming that part of the hearing referee’s award of benefits.
Plaintiff filed an application for leave to appeal with this Court, which was denied on January 25, 1982. Plaintiff then filed an application for leave to appeal with the Supreme Court. The Supreme Court remanded "the case to the Court of Appeals for consideration as on leave granted” on December 6, 1982. 414 Mich 970 (1982).
Plaintiff first claims that the "like benefits” provision of MCL 418.161; MSA 17.237(161) denies plaintiff equal protection of the laws in violation of the United States and Michigan Constitutions. We disagree.
The. appropriate standard of review to be utilized where the statute does not involve any discernible fundamental interest or affect with particularity any protected class but deals primarily with socioeconomic legislation is whether the challenged classification is rationally related to a legitimate state interest. New Orleans v Dukes, 427 US 297; 96 S Ct 2513; 49 L Ed 2d 511 (1976); Michigan State Employees Ass’n v Michigan Employment Security Comm, 94 Mich App 677; 290 NW2d 729 (1980). Under the rational basis test, a statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it. Dandridge v Williams, 397 US 471; 90 S Ct 1153; 25 L Ed 2d 491 (1970).
Plaintiff’s contention that an intermediate level of review should be employed which would require that the classification in question bear a substantial relation to the purpose of the statute is without merit. Plaintiff cites Manistee Bank & Trust Co v McGowan, 394 Mich 655; 232 NW2d 636 (1975), in support of this contention. We agree with decisions subsequent to Manistee Bank, supra, which have limited the application of the "substantial relation” test to the rather unique circumstances presented in that case. See Larkin v Bay City Public Schools, 89 Mich App 199; 280 NW2d 483 (1979); McAvoy v H B Sherman Co, 401 Mich 419; 258 NW2d 414 (1977); Cruz v Chevrolet Grey Iron Division of General Motors Corp, 398 Mich 117; 247 NW2d 764 (1976).
The clear purpose of MCL 418.161; MSA 17.237(161) is to prevent the recovery of double benefits for the same injury. This is the plain inference from the language of the statute, i.e., that police officers or fire fighters may recover under WDCA or under the provisions of a charter providing like benefits, but shall not be entitled to both. See Schave v Dep’t of State Police, 58 Mich App 178; 227 NW2d 278 (1975). The apparent goal of the Legislature in devising the "like benefits” provision was to seek a way to reduce the burden on municipal taxpayers arising from the high cost of doing business.
It thus becomes incumbent to determine whether the challenged classification is rationally related to the stated purpose of MCL 418.161(l)(a); MSA 17.237(161)(l)(a). The "like benefits” provision of the statute is applicable only to fire fighters and police officers. It cannot be denied that police officers and fire fighters are engaged in occupations which entail a daily threat of physical injury. The number and duration of compensable injuries in these occupations cannot reasonably be compared with those of an ordinary civil servant. Plaintiffs proposition that there are no distinguishable characteristics between a secretary and a fire fighter simply ignores the nature of the two occupations. While preventing a secretary from recovering double benefits would also work to achieve the goal of the "like benefits” provision, " '[t]he Equal Protection Clause does not require that a state must choose between attacking every aspect of a problem or not attacking the problem at all’ ”. Manistee Bank, supra, p 672. The Legislature, in its discretion, could rationally determine that the claims by secretaries, as well as other municipal employees, simply do not rise to the serious level presented by the claims of fire fighters and police officers.
Accordingly, we hold that the "like benefits” provision is rationally related to the legitimate state interest of reducing the financial burden placed upon municipalities by the great number of compensable injuries sustained by police officers and fire fighters.
Second, plaintiff contends that the WCAB erred in determining that workers’ compensation benefits and the duty-disability pension payments received by the plaintiff are "like benefits” pursuant to MCL 418.161(l)(a); MSA 17.237(161)(l)(a).
MCL 418.161(l)(a); MSA 17.237(161)(l)(a) provided in pertinent part at the time relevant to this action:
"Policemen, firemen, or employees of the police or fire departments * * * in municipalities or villages of this state having charter provisions prescribing like benefits, may waive the provisions of this act and accept in lieu thereof like benefits as are prescribed in the charter but shall not be entitled to like benefits from both.”
The dispute is over the interpretation to be given the term "like benefits”.
The first judicial guideline on this issue was provided in MacKay v Port Huron, 288 Mich 129; 284 NW 671 (1939). There, the benefits under a charter amounted to $900 per year, for life or until remarriage. The workers’ compensation bene-. fits amounted to $936 per year for 300 weeks at the longest, in addition to a provision for funeral expenses. The Court held that the two were "like benefits”, indicating that "[t]he term Tike benefits,’ employed in the statute, does not mean identical benefits or co-extensive in every detail but, considering the full scope thereof, similar in its salient features”. MacKay, supra, p 134.
In Johnson v Muskegon, 61 Mich App 121; 232 NW2d 325 (1975), plaintiff’s duty-disability pension provided $411.09 per month until the age of 55, at which time plaintiff would be entitled to retirement pension benefits. In contrast, workers’ compensation benefits were available in the amount of $300 per month until further order of the bureau. Medical benefits were not available under the pension plan while the WDCA did so provide. Nonetheless, the Court held that, as in MacKay, the only "salient feature” was the periodic payments for disability. The absence of medical benefits under the pension plan was held not to be such an inequality as to exclude the operation of the statute. Johnson, supra, p 126.
In light of the standards set out in these cases, plaintiff’s argument must fail. The only relevant factor is that both the pension plan and WDCA provide periodic payments for disability. The facts that plaintiff could receive $110 more through workers’ compensation benefits, that medical benefits are provided under WDCA, and that plaintiff contributed to his pension plan are factors which have been raised as controlling, but nonetheless rejected, in previous decisions. See also Vasser v Muskegon Fire Dep’t, 1979 WCABO 2020, and Plough v Muskegon Police Dep’t, 1979 WCABO 2082, both afFd by an equally divided court, Vasser v Muskegon, 415 Mich 308; 329 NW2d 690 (1982). The additional factors cited by plaintiff, i.e., that the pension benefits are taxable and that rehabilitation services are provided under the WDCA, do not change the result. Both of these factors were present in the previous cases even though not mentioned as relevant. The inescapable conclusion is that both the pension and the WDCA were designed to provide plaintiff with monthly payments while he is disabled from gainful employment. Thus, the two compensation methods are alike, and the factors cited by plaintiff do not affect their basic nature.
Finally, we must determine whether plaintiff made an effective and binding election to receive workers’ compensation benefits rather than his duty-disability pension.
Pursuant to the conclusion reached on the second issue plaintiff may not receive benefits under both the WDCA and his pension plan. He must choose between the two compensation plans. The issue is whether such an election has been made.
In MacKay, supra, the Supreme Court indicated that where one is accorded and accepts the benefits of one plan, he is deemed to have elected those benefits and has waived the other. MacKay, supra, p 135. The Court in Johnson, supra, indicated that by accepting pension benefits, the provisions of the workers’ compensation act are waived. Johnson, supra, pp 124-125, fn 4. However, neither of these decisions is controlling here. While plaintiff did receive workers’ compensation benefits, thus indicating an election, he later also received benefits under the pension plan. Further, plaintiff accepted both types of benefits at a time when he assumed that he was entitled to both. Thus, it would be unfair to deem the acceptance of either as a waiver of the other.
Furthermore, plaintiffs indication at trial that, if he had to choose, he would elect workers’ compensation benefits, does not constitute an effective election. The terms set by plaintiff were conditional; he was responding to the hypothetical scenario proposed to him. Since the election was not final and unequivocal, it is not binding.
While it seems obvious, both from the superior benefits available and from his indication at trial, that plaintiff will elect workers’ compensation over his pension plan, no one but the plaintiff can make that choice. This Court certainly cannot choose for him. Thus, it will be necessary to remand the case to enable plaintiff to make a binding election.
Remanded. | [
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Per Curiam.
On July 16, 1979, the trial court denied plaintiffs motion to vacate an arbitration award of $7,000 to defendant.. This Court affirmed the trial court’s decision in an unpublished per curiam opinion (No. 46520, released February 6, 1981). On April 20, 1983, the Supreme Court remanded the case to this Court "for reconsideration in light of Detroit Automobile Inter-Ins Exchange v Gavin [416 Mich 407; 331 NW2d 418 (1982)]”. 417 Mich 962 (1983).
The relevant facts are found in this Court’s first opinion:
"On September 16, 1973, Eddie Jenkins was driving an automobile owned by defendant Cedric Tapp, who was a passenger in the car. The defendant had no insurance coverage on his automobile. The defendant was neither related to Jenkins nor did he live in the same household. The defendant’s automobile was struck by another uninsured vehicle. At the time of the accident, Jenkins owned his own automobile which was insured by plaintiff DAIIE under a policy which included uninsured motorist coverage.”
Gavin, supra, 416 Mich 443, ruled that an appellate court has the power to set aside an arbitration award if "the arbitrators through an error in law have been led to a wrong conclusion, and that, but for such error, a substantially different award must have been made”. Plaintiff argues that the arbitrators in the present case erred by concluding that defendant was an "insured” under its policy with Jenkins.
We disagree. Under "Section II — Family and Guest Protection”, plaintiff is required
"[t]o pay all reasonable expenses * * *:
"Part (1) To or for each person who sustains bodily injury, caused by accident, while occupying an automobile with respect to the use of which, at the time of the accident, insurance would be afforded under Section I of this policy.”
In Section I, insurance would be afforded "to a non-owned automobile used with the permission of any person having the right to grant it”. Reading these two sections together, an owner of an automobile who had given permission to an insured to drive the automobile could be considered a "guest” should he remain in the car while the insured drove.
This conclusion is supported by the exclusions listed under "Family and Guest Protection”:
"This policy does not apply under Medical Payments Coverage to bodily injury:
"(a) sustained while occupying any vehicle while located for use as a residence or premises;
"(b) sustained by the named insured or relative while occupying or through being struck by (1) a vehicle operated on rails or crawler treads, or (2) a vehicle designed primarily for use off the public roads, while not upon the public roads;
"(c) to any person other than the named insured or relative, resulting from the use of (1) a non-owned automobile in the automobile sales or service business, or (2) a non-owned automobile in any other business or occupation except operation or occupancy of a private passenger automobile by the named insured or operated by his private chauffeur or domestic servant;
"(d) to any person who is employed in the automobile sales or service business, if the accident arises out of the operation thereof and benefits therefor are paid or payable under any workmen’s compensation law, except, that this exclusion shall not apply to bodily injury sustained by the named insured or relative resulting from the operation or occupancy of an owned automobile in the automobile sales or service business;
"(e) to any employee of an insured arising out of and in the course of (1) domestic employment if benefits therefor are payable under any workmen’s compensation law, or (2) other employment for the insured;
"(f) sustained by a relative who is a member of the armed forces of any government but this exclusion does not apply to Part (1);
"(g) due to war;
"(h) due to nuclear reaction or nuclear radiation or radioactive contamination;
"(i) sustained while occupying any automobile operated in any prearranged race or speed contest.” (Emphasis supplied.)
The emphasized language indicates that even though plaintiff contemplated the possibility of the guest provisions applying to a situation involving a nonowned automobile, plaintiff saw fit to exclude only a certain category of guests (i.e., automobile salespersons).
Uninsured motorist provisions must be coextensive with the liability provisions. Pappas v Central National Ins Group of Omaha, 400 Mich 475; 255 NW2d 629 (1977). The primary purpose of this requirement is "to reduce claims against the motor vehicle accident claims fund”. 400 Mich 480. We believe that that purpose would also be served by including guest provision coverage as well, an interpretation which the arbitrator apparently adopted.
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M. J. Kelly, P.J.
This is an appeal from a decision of the Michigan Employment Relations Commission which held that respondents Wayne County, Wayne County Board of Commissioners and the Wayne County Executive had engaged in unfair labor practices by unilaterally changing wages, hours and other conditions of employment during the collective bargaining process, contrary to § 10(1)(e) of the public employment relations act, MCL 423.201 et seq.; MSA 17.455(1) et seq. (pera). At issue in this case is a significant principle of public sector labor law. The City of Detroit has filed an amicus curiae brief in support of respondents’ position. Council 25 of the American Federation of State, County and Municipal Employees •and its affiliated locals (afscme) have filed a cross-appeal challenging that portion of the commission’s order limiting its make-whole relief through July 5, 1984. We have thoroughly reviewed the administrative record and briefs on appeal and we affirm all aspects of the commission’s decision.
There is no dispute as to the essential facts in this case, as set forth in the findings of the hearing officer and adopted by the commission. This controversy arises out of a collective-bargaining agreement between the parties, which became effective December 1, 1979, and expired on June 30, 1982. Prior to the expiration of the agreement, the parties began negotiating a new contract and reached a tentative agreement on July 1, 1982, which essentially continued the terms of the earlier agreement. This tentative agreement was, however, subsequently rejected by the Wayne County Board of Commissioners and negotiations continued. In a letter dated August 27, 1982, respondents informed afscme that, until either a new agreement or an impasse was reached, the earlier agreement would be continued with the exception of cost of living and arbitration provisions.
Negotiations continued, during which time Wayne County’s plan for reorganization of government went into effect, commencing with the election of a county executive, who took office on January 1, 1983. A second tentative agreement was reached between the parties in April of 1983 but was subsequently rejected by the afscme mem bership. Negotiations continued and the parties eventually agreed to mediation. Mediation proceedings were conducted on July 8 and July 11, 1983.
By letter of July 11, 1983, respondents advised afscme that they would no longer honor the expired collective bargaining agreement. Respondents further informed afscme that forthcoming changes in conditions of employment would include the imposition of a four-day work week and corresponding pay decreases, as well as changes in procedures governing grievances, disciplinary measures, transfers, demotions, promotions, reclassifications and layoffs. Mediation nevertheless continued but a third tentative agreement was rejected by afscme membership on August 4, 1983. On August 8, 1983, afscme applied to the commission for an appointment of a fact finder as provided under §25(1) of the labor mediation act, MCL 423.1 et seq.; MSA 17.454(1) et seq.
While that application was pending, afscme was informed by respondents’ letter of August 9, 1983, that respondents viewed the membership’s vote on August 4, 1983, as an impasse and that the changes described in the July 11, 1983, letter would be implemented on August 15, 1983. Afscme denied the existence of an impasse and requested further bargaining. The parties continued to negotiate although the respondents did proceed to implement the proposed changes.
Afscme filed unfair labor charges against respondents on July 21, 1983, and on August 23, 1983. These charges were consolidated and hearings were subsequently conducted in September of 1983 before a hearing officer who, on January 19, 1984, issued findings of fact and concluded therefrom that respondents had not engaged in any unfair labor practices under pera. The hearing officer recommended the dismissal of afscme’s charges.
Members of the commission disagreed with the hearing officer’s conclusions of law and issued an opinion and order on December 12, 1984, concluding that respondents had violated their duty to bargain in good faith by implementing unilateral changes in mandatory subjects of bargaining during the negotiation process. At that time, the commission reserved its decision on the issuance of retroactive relief for afscme employees and allowed the parties until January 31, 1985, to settle their differences on the relief issue without administrative intervention. On March 29, 1985, merc issued a supplemental opinion and ordered respondents to cease and desist from implementing the disputed changes in conditions of employment and to make employees whole for any monetary losses suffered during the period commencing August 15, 1983, and ending July 5, 1984.
The general principles of law governing an employer’s right to implement changes in wages and other working conditions during the negotiation process are well established and have been set forth by this Court in Local 1467, International Ass’n of Firefighters, AFL-CIO v Portage, 134 Mich App 466, 472-473; 352 NW2d 284 (1984):
At the expiration of a labor contract, a public employer is charged with the duty to bargain in good faith pursuant to a proposed new contract with regard to "wages, hours, and other terms and conditions of employment”. MCL 423.215; MSA 17.455(15). Subjects of bargaining included in this phrase are referred to as "mandatory subjects” of bargaining. At contract expiration, those "wages, hours, and other terms and conditions of employment” established by the contract which are "mandatory subjects” of bargaining survive the contract by operation of law during the bargaining process. The public employer, thus, has the continuing obligation during the bargaining process to apply those "wages, hours, and other terms and conditions of employment” so designated as "mandatory subjects” until such time as impasse is reached in the bargaining process.
Neither party may take unilateral action on a "mandatory subject” of bargaining absent an impasse in negotiations. An employer taking unilateral action on a "mandatory subject” of bargaining prior to impasse in negotiations has committed an unfair labor practice. MCL 423.210(1)(e); MSA 17.455(10)(1)(e). This prohibition against unilateral action prior to impasse serves to foster labor peace and must be liberally construed, particularly in light of the prohibition against striking by public employees set forth in MCL 423.202; MSA 17.455(2). [Citations and footnote omitted. See also, Ottawa Co v Jaklinski, 423 Mich 1, 12-13; 377 NW2d 668 (1985).]
In this case, we must consider what effect, if any, the initiation of fact-finding proceedings has on the employer’s ability to make unilateral changes in conditions of employment without risk of committing an unfair labor practice under MCL 425.210(1)(e); MSA 17.455(10)(1)(e).
The commission’s fact-finding function is created under the labor mediation act rather than under pera and is thus properly viewed as a step in the mediation process:
When in the course of mediation under section 7 of Act No. 336 of the Public Acts of 1947, as amended, being section 423.207 of the Michigan Compiled Laws, it shall become apparent to the commission that matters in disagreement between the parties might be more readily settled if the facts involved in the disagreement were determined and publicly known, the commission may make written findings with respect to the matters in disagreement. The findings shall not be binding upon the parties but shall be made public. [MCL 423.25(1); MSA 17.454(27)(1).]
Afscme requested that the commission intervene in the mediation process as a fact finder on August 8, 1983, exactly one month after the commencement of mediation and four days after its membership had rejected the third tentative "mediated” agreement. Respondents informed afscme by letter of August 9, 1983, that the proposed changes in wages, hours and working conditions would become effective August 15, 1983. The issue is whether respondents violated their duty to bargain in good faith by announcing and unilaterally implementing the changes after fact-finding proceedings had been initiated, during the mediation process.
In its opinion of December 12, 1984, the commission concluded:
We will continue to regard factfinding as an integral part of the dispute resolution processes provided by the Legislature. We decide today that implementation of a last best offer when factfinding is pending is objectionable conduct by the Employer, for the reason that it obviously tends to forestall the possibility of reaching agreement through the use of the factfinding process. We conclude that by implementing its last best offer when factfinding had been initiated but not completed, Respondent violated its duty to bargain in good faith.
This conclusion was reaffirmed and amplified to some extent in the commission’s supplemental opinion of March 29, 1985:
Moreover, as we indicated in our earlier deci sion, we consider the requirement that Respondent in this case complete factfinding before implementing its "last best offer” to be mandated by the statute. Section 25 of the Labor Mediation Act, MCLA 423.25; MSA 17.454(27), provides for fact-finding under pera when, in the discretion of the Commission, it determines that "matters in disagreement between the parties might be more readily settled if the facts involved in the disagreement were determined and publicly known.” This procedure is not contained in the federal law and is clearly intended, in part, to balance the fact that under pera employees do not have the right to strike. . . . The legislature was clearly sensitive to the special role that public opinion plays in a labor dispute in the public sector, and it expressed its will that an objective view of the facts and positions of both parties be made public where appropriate. As we indicated earlier, much of the benefit of this objective and public review is lost where a public employer, factfinding having been initiated but not completed, seizes the initiative by implementing its "bottom line” position. As previously stated, we find Respondent’s implementation of its "last best offer” under these circumstances to be inconsistent with the statutory scheme and with its duty to bargain in good faith.
On appeal, respondents object to the principle of law announced by the commission on two basic grounds, which we consider separately.
Respondents first argue that the effect of the commission’s decision is to make fact-finding a compulsory step in the mediation process, contrary to the intent of the Legislature in enacting MCL 423.25(1); MSA 17.454(27)(1). We agree that the commission’s fact-finding function in mediation is permissive in nature and not compulsory. We fail, however, to see, nor do respondents adequately explain, how the commission’s ruling renders that fact-finding function compulsory. In the instant case, for example, the commission might have denied afscme’s application at which time respondents could have implemented the changes in wages and working conditions, provided that impasse had in fact been reached. Moreover, an employer is not precluded from implementing unilateral changes after an impasse has been reached where there has been no initiation of fact-finding procedures. Thus, had respondents implemented their changes after impasse but prior to any request for fact-finding on the part of afscme, afscme’s unfair labor practice charges would have been dismissed. In our view, the principle of law announced by the commission in this case applies only where an application for fact-finding has been submitted by one of the parties or where the commission itself has determined that fact-finding is necessary.
Respondents further argue that the commission’s decision is unlawful because it promulgates a new rule in the course of an adjudicatory proceeding, contrary to the rule-making provisions of the Administrative Procedures Act of 1969. MCL 24.201 et seq.; MSA 3.560(101) et seq. MCL 24.207; MSA 3.560(107) defines a rule as an agency regulation, statement, standard, policy, ruling, or instruction of general applicability, which implements or applies law enforced or administered by the agency or which prescribes the organization procedure, or practice of the agency. MCL 24.241; MSA 3.560(141) sets forth elaborate procedures for promulgating any agency rules. Expressly excluded from the definition of administrative rule is a "determination, decision or order in a contested case.” MCL 24.207(f); MSA 3.560(107)(f).
It is impossible to promulgate specific administrative rules in anticipation of every conceivable situation prior to the enforcement of a statute. Thompson v Dep’t of Corrections, 143 Mich App 29, 32-33; 371 NW2d 472 (1985), conflicts order denied, 422 Mich 1238 (1985). An administrative agency may thus announce new principles of law through adjudicative proceedings in addition to doing so through its rule-making powers. DAIIE v Comm’r of Ins, 119 Mich App 113, 117; 326 NW2d 444 (1982), lv den 417 Mich 1077 (1983). The effective administration of a statute by an administrative agency cannot always be accomplished through application of predetermined general rules. Rather, some principles of interpretation must evolve in response to actual cases in controversy presented to the agency. An administrative agency must therefore have the authority to act either by general rule or by individual order. SEC v Chenery Corp (Chenery II), 332 US 194, 202; 67 S Ct 1575; 91 L Ed 1995 (1947), reh den 332 US 783; 68 S Ct 26; 92 L Ed 367 (1947). See also American Way Life Ins Co v Comm’r of Ins, 131 Mich App 1, 5-6; 345 NW2d 634 (1983), lv den 419 Mich 937 (1984). The decision of an agency to promulgate law through rule-making or through adjudication rests within the sound discretion of that agency even where a rule breaks from past decisions or where previously established rules are reconsidered. NLRB v Bell Aerospace Co, 416 US 267, 294-295; 94 S Ct 1757; 40 L Ed 2d 134 (1974), dicta overruled in NLRB v Hendricks Co Rural Electric Membership Corp, 454 US 170, 186-188; 102 S Ct 216; 70 L Ed 2d 323 (1981).
In our view, the commission did not abuse its discretion when it adopted, in this adjudicative proceeding, a rule prohibiting employers from implementing unilateral changes in mandatory subjects of bargaining where mediation fact-finding has been initiated. In fact, the "rule” announced by the commission may not be as inflexible as respondents claim it to be and the commission may wish to work out its precise contours in future adjudicative proceedings.
Not only do we reject respondents’ challenges to the commission’s ruling in this case, we further point out that the commission’s decision is consistent with the fundamental purpose of pera, which is to create a balance between the public employer and the public employee in the matter of labor-management relations in order to foster an equitable adjustment of interests and to ensure fundamental fairness to all concerned. See Lake Michigan College Federation of Teachers v Lake Michigan Community College, 390 F Supp 103 (WD Mich, 1974), rev’d on other grounds 518 F2d 1091 (CA 6, 1975), cert den 427 US 904; 96 S Ct 3189; 49 L Ed 2d 1197 (1976); Portage, supra. Moreover, the Michigan Legislature has properly delegated to the commission the task of implementing pera and we accord great deference to that agency’s interpretation of the statutory provisions it has been entrusted to enforce. See Wardlow v Great Lakes Express Co, 128 Mich App 54, 64; 339 NW2d 670 (1983), lv den 419 Mich 871 (1984); Michigan Life Ins Co v Comm’r of Ins, 120 Mich App 552, 558; 328 NW2d 82 (1982), lv den 417 Mich 1077 (1983). We are not persuaded that the commission committed any errors of law in finding an unfair labor practice under the circumstances of this case.
Respondents also challenge the commission’s retroactive application of the rule announced in this case. This was a significant issue considered below, as evidenced by the commission’s decision to allow the parties to attempt their own resolution of the issue of relief. In its supplemental decision and order of March 29, 1985, the commission pointed out that, as a general rule, a new rule of law applies both to the case in which it arises and to all pending cases. The commission further noted that retroactivity must be balanced against the mischief of providing a result contrary to statutory design or to legal and equitable principles.
The commission then stated that, while the holding of its earlier decision in this case in some sense involved a "new rule,” that rule did not overrule established principles of law but rather extended the law in a way which could reasonably have been anticipated by the respondents. The commission concluded that respondents’ implementation of its last best offer was inconsistent with the statutory scheme and with its duty to bargain in good faith. Respondents’ actions were prompted instead by significant fiscal concerns which did not relieve the public employer of its legal obligation to continue the former agreement. Since the commission accepted respondents’ claims of financial distress, there was no need to conduct further hearings on this issue.
We cannot say that the commission erred as a matter of law or abused its discretion in ordering retroactive relief in this case. We find it significant that merc did not decide the matter in its original decision and order but rather took whatever time was necessary to consider any implications of its order of relief. The careful reasoning set out in the supplemental opinion cannot be characterized as arbitrary, capricious or an abuse of discretion. It is apparent that the commission conscientiously balanced the competing equities and reached a result best effectuating the goals of pera.
On cross-appeal, afscme objects to that portion of the decision limiting the monetary relief retroactively available to its membership to the period commencing May 30, 1984, and ending July 30, 1984. In its supplemental opinion, the commission reasoned that the employees were to be made whole only for those monetary losses resulting from respondents’ unlawful unilateral action up to the date on which the respondents’ could have lawfully implemented their "last best offer.” The commission then reasoned that the parties had a "reasonable time” after the submission of the fact finder’s report within which to negotiate an agreement. It was concluded that a reasonable time was sixty days after the date of the fact finder’s report which was issued on May 5, 1984. While it is true that neither pera nor the labor mediation act provides specific limits on the number of days which must pass after fact-finding before the public employer may unilaterally implement its last best offer, we find the commission’s solution in this case reasonable and within the purview of its particular administrative competence.
Affirmed.
Respondents’ implementation of unilateral changes in cola benefits and in arbitration procedures was the subject of another unfair labor practice charge before merc and is not at issue here.
According to respondents’ brief on appeal, the commission did appoint a fact finder on October 17, 1983, who conducted hearings in 1983 and 1984 and issued findings in May of 1984. Two more tentative agreements were reached on September 3, 1984, and on December 1, 1984, both of which were rejected by afscme membership. | [
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Brickley, J.
In these cases, we are asked to determine the proper method of computing interest under the 1980 amendment to MCL 600.6013; MSA 27A.6013. The lower courts have reached conflicting results as to whether, and how, judgment interest accrued before June 1, 1980, should be compounded. We hold that there should be no compounding of that interest.
I
Before 1980 PA 134, MCL 600.6013; MSA 27A.6013 provided:
Interest shall be allowed on any money judgment recovered in a civil action, such interest to be calculated from the date of filing the complaint at the rate of 6% per year unless the judgment is rendered on a written instrument having a higher rate of interest in which case interest shall be computed at the rate specified in the instrument if such rate was legal at the time the instrument was executed. In no case shall the rate exceed 7% per year after the date judgment is entered. In the discretion of the judge, if a bona fide written offer of settlement in a civil action based on tort is made by the party against whom the judgment is subsequently rendered and the offer of settlement is substantially identical or substantially more favorable to the prevailing party than the judgment, then no interest shall be allowed beyond the date the written offer of settlement is made.
That language had been held to provide for simple, rather than compound, interest. See Schwartz v Piper Aircraft Corp, 90 Mich App 324; 282 NW2d 306 (1979).
The statute was extensively revised by the 1980 amendment. The paragraphs dealing with actions filed before June 1, 1980, provide the following with regard to computation of interest:
(2) For complaints filed before June 1, 1980, in an action involving other than a written instrument having a rate of interest exceeding 6% per year, the interest on the judgment shall be calculated from the date of filing the complaint to June 1, 1980 at the rate of 6% per year and on and after June 1, 1980 to the date of satisfaction of the judgment at the rate of 12% per year compounded annually.
(3) For complaints filed before June 1, 1980, in an action involving a written instrument having a rate of interest exceeding 6% per year, the interest on the judgment shall be calculated from the date of filing the complaint to the date of satisfaction of the judgment at the rate specified in the instrument if the rate was legal at the time the instrument was executed. However, the rate after the date judgment is entered shall not exceed the following:
(a) Seven percent per year compounded annually for any period of time between the date judgment is entered and the date of satisfaction of the judgment which elapses before June 1, 1980.
(b) Thirteen percent per year compounded annually for any period of time between the date judgment is entered and the date of satisfaction of the judgment which elapses after May 31, 1980.
II
In Gage, plaintiff was awarded by a jury, in March 1979, $1,500,000 in his wrongful death action, filed on August 8, 1974. After exhausting its appeals, defendant paid the judgment and the undisputed portion of the interest, i.e., simple interest of six percent until June 1, 1980, and interest of twelve percent, compounded annually, using the $1,500,000 judgment amount as the base to compute the interest. However, plaintiff refused to execute a satisfaction of judgment, claiming that the interest was improperly calculated. According to plaintiff, the 1980 amendment required that the six percent pre-1980 interest be compounded and that the amount accrued by that date should have been included in the base from which the twelve percent compounded interest was calculated. Defendant moved to compel plaintiff to execute the satisfaction of judgment; following arguments, the trial judge issued such an order on April 14, 1982.
Plaintiff appealed to the Court of Appeals, which affirmed in part and reversed in part, holding that the pre-1980 six percent interest was simple, not compound, interest, but that the amount so accrued as of June 1, 1980, should be added to the judgment amount for purposes of computing the twelve percent compounded interest after June 1, 1980.
The defendant applied for leave to appeal to this Court, challenging the inclusion of the pre-June 1, 1980, interest in the post-June 1, 1980, computation, and the plaintiff applied for leave to appeal as cross-appellant, arguing that the statute re quires compounding of interest at the six-percent rate before June 1,1980.
In Burnett, plaintiff likewise recovered $1,500,-000 (later reduced to $1,435,000 pursuant to a prior settlement with one of the defendants) in January 1979, following trial on her personal injury claim filed in August 1975. The defendants placed the disputed portion of the interest in escrow and filed a motion for determination of the interest question. The trial court entered an order on December 12, 1983, concluding that there should be no compounding of the interest accrued before June 1, 1980, either in its initial computation or by including it in the base on which the twelve percent compound interest would be computed thereafter.. Thus, the court awarded the escrowed portion of the interest to the defendants.
The plaintiff attempted to file a claim of appeal, but the appeal was dismissed by the Court of Appeals on its own motion on the ground that the order was not appealable of right. The plaintiff applied for leave to appeal to this Court, challenging both the rejection of its claim of appeal and the trial court’s decision on the interest issue.
We granted leave to appeal in both cases on April 22, 1985, to resolve the computation of interest question. 422 Mich 873 (1985).
Ill
In Gage, 133 Mich App 366; 350 NW2d 257 (1984), Judge Gribbs, in addressing the question whether there should be compounding of interest before June 1, 1980, looked to the legislative analyses of the bill that became 1980 PA 134 in attempting to determine the legislative intent:
Under the heading "Content of the Bill” in each analysis, the writer interpreted the bill as referring to 6% simple interest in the pertinent subsection:
"The interest rate on the money judgment on such a complaint would be calculated from the date that the complaint v/as filed until May 1, 1980 [later amended to June 1, 1980], at the current rate of six percent per year . . . (April 22, 1980, report.) (Emphasis added.)
"Interest on such judgments would accrue at the present rate of six percent from the date a complaint was filed until June 1, 1980 . . . .” (May 27, 1980, report.) (Emphasis added.) [133 Mich App 372.]
Then, the Court looked to the actual wording of the amendment, concluding that it supported the refusal to compound interest before June 1, 1980:
With regard to the rules of grammar, the "rule of the last antecedent” is more applicable than the exception to that rule since a "dominant purpose” to provide for compounding before the effective date has not been shown. This Court reads the insertion of the effective date as having the effect of "separating” not only the application of 6% versus 12%, but simple versus compound interest as well. As for public policy, the application of 12% interest compounded annually, after the effective date of the statute, would certainly satisfy the problem the statute sought to address.
Viewing the statute syntactically, the phrase "compounded annually” is not separated from the remainder of subparagraph 2 by a comma or other form of punctuation. The adverbial phrase therefore applies only to its nearest antecedent, the 12% interest, and not to the remote antecedent of 6% interest. Had the Legislature intended to alter the simple interest construction of the 6% language, which is essentially carried forth from the prior version of the statute, it would have written subparagraph 2 to read:
. . At the rate of 6% per year compounded annually and on and after June 1, 1980 to the date of satisfaction of the judgment at the rate of 12% per year compounded annually.”
Alternatively, by separating the phrase "compounded annually” by a comma, the Legislature could have accomplished the same substantive change, since the modifier would then apply to the entire subsection.
Applying the rule of the last antecedent, we conclude that the Legislature intended to apply the 6% simple interest as per the prior statute. The trial court correctly interpreted this aspect of the relevant subsection at issue. [133 Mich App 372-373.]
The Court of Appeals agreed with plaintiff, however, on the question whether the amount of interest which previously accrued at the six-percent rate prior to June 1, 1980, should be included in the initial base to which the twelve-percent rate would apply. Recognizing that the statute was open to either construction, the Court expressed the legislative intent behind the 1980 amendment as follows:
Construing the statute on a clean slate, it is clear that the 1980 amendment reflects a legislative intent to deter dilatory tactics by civil defendants who, at 6% simple interest, had no incentive whatsoever to promptly settle claims against them. Those parties were able to enjoy plaintiffs money at interest rates below market and in effect earn a rate of return of the difference between 6% simple interest and market rate interest. The 12% compound interest provision was an attempt to bring judgment interest into line with prevailing market rates and thereby provide a disincentive to delay and eliminate some needless litigation which has been clogging the courts for strictly tactical and economic reasons. [133 Mich App 373-374.]
The Court pointed to Denham v Bedford, 407 Mich 517; 287 NW2d 168 (1980), for the proposition that the judgment interest statute is a remedial one, entitled to liberal interpretation, and concluded that
the 12% interest rate commencing June 1, 1980, applies to the amount of the judgment combined with interest which has accrued to that date at the 6% simple interest rate. [133 Mich App 374.]
We agree with the Court of Appeals in Gage that the Legislature did not intend to provide for compounding of interest before June 1, 1980. The analyses of the bill, as well as the wording of the amended statute, clearly indicate the intent that before June 1, 1980, interest was to continue to be computed in the former manner — six percent interest without compounding.
However, we disagree with the Court of Appeals conclusion that the interest that accrued at the six-percent rate before June 1, 1980, should be part of the base on which the later twelve percent compound interest is computed. It is this issue that presents a less obvious answer and about which the parties argued most vigorously.
The plaintiffs contend that even if we hold that compounding does not begin until June 1, 1980, at least on that date the new twelve-percent interest rate ought to be applied to the accumulated six percent interest, even though it was not previously compounded. They also ask that we consider what they believe to be the injustice of allowing the economic benefits of a large sum of accumulated interest to redound to the benefit of the defendant tortfeasors rather than to the plaintiffs.
The defendants argue that the Legislature has spoken clearly and unambiguously on this issue of simple interest versus compound interest by making June 1, 1980, the dividing line between the two approaches. A close reading of the statute convinces us that we do not have the latitude to indulge in policy preferences. It was clear to the Legislature when it embarked on this amendment that the six percent interest had been construed to be simple interest, Schwartz, supra, and it made no attempt to change it retroactively. In fact, the Legislature made it clear that the six percent interest would remain in effect for pre-June 1, 1980 judgment interest and that the compounding of interest would not begin until that date. To suggest now that the pre-June 1, 1980 accumulated six percent simple interest should be compounded would violate that June 1, 1980 dividing line. More convincingly, however, the amendment states, "[T]he interest on the judgment” (emphasis added) on and after June 1, 1980, shall be "at the rate of 12% per year compounded annually.” It does not read "The interest on the judgment and accumulated interest shall be . . . .”
The difference between simple and compound interest is that simple interest does not merge with the principal and become part of the base on which future interest is calculated. Here the accumulated interest was not part of the principal, i.e., the original judgment. Only interest accruing after June 1, 1980, merges with the judgment and becomes part of the base for calculating future, interest. The Legislature’s intention was that there was to be no change in the manner in which interest accruing before June 1, 1980, was to be treated.
Denham, supra, does not compel a different result. The cardinal rule of statutory construction is to give effect to the intent of the Legislature. City of Lansing v Lansing Twp, 356 Mich 641, 648; 97 NW2d 804 (1959).
For the reasons stated, we affirm in part and reverse in part the Court of Appeals decision in Gage, and reinstate the April 14, 1982 order of the Wayne Circuit Court. In Burnett, we affirm the December 12, 1983 order of the Oakland Circuit Court.
Williams, C.J., and Levin, Ryan, Cavanagh, Boyle, and Riley, JJ., concurred with Brickley, J.
1980 PA 134, effective June 1, 1980.
We agree with the plaintiff that the trial judge’s order was a final order appealable as of right. Gherardini v Ford Motor Co, 394 Mich 430; 231 NW2d 643 (1975).
"Accumulated” interest is somewhat misleading as it applies to the prejudgment portion of the interest in that it is not until the judgment is known and entered that interest is computed back to the time of the filing of the complaint. It is only literally accumulated for the postjudgment portion of the interest. | [
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Taylor, J.
Respondent, Department of Social Services, appeals as of right the circuit court’s reversal of a hearing referee’s decision that respondent properly proposed closing petitioner’s, Mary Rose Ronney’s, medical assistance case because of excess assets.
Petitioner, who is over sixty-five years old and resides in a nursing home, is legally incapacitated. Petitioner’s niece, Sandra Sims, is her legal guardian. In 1989, petitioner inherited $50,000, which Sims placed in a trust established under a probate court order of March 7, 1990. Sims named herself as trustee. The legal affairs office of the dss advised that the trust was revocable and thus, should be considered available in determining petitioner’s Medicaid eligibility. In November 1990, the dss determined that petitioner was ineligible for Medicaid benefits because of excess assets and closed her case.
At a hearing on February 13, 1991, the parties agreed to reinstate petitioner’s Medicaid benefits until the dss reevaluated the trust. Upon completing its review, the dss determined that the trust met the characteristics of a Medicaid Qualifying Trust (mqt) and that the value of the trust was countable in determining petitioner’s eligibility for Medicaid assistance. On April 9, 1991, the dss closed petitioner’s case. Acting on petitioner’s behalf, Sims challenged this decision and requested a hearing, after which the referee decided that the dss properly proposed to close petitioner’s Medicaid assistance case because of excess assets. The referee reasoned that because the trust was revocable, and because the trust met the definition of an mqt, the trust constituted a countable asset for determining Medicaid eligibility. Petitioner requested a rehearing, which was granted, and the prior decision was affirmed.
Petitioner appealed in the circuit court, which reversed the decision of the referee, holding that the language of the Medicaid statute, 42 USC 1396a(k), was clear that only trusts established by an individual or an individual’s spouse could be considered mqts. The circuit court reasoned that because the trust in this case was established by a guardian, the trust could not be considered an mqt. Thus, the circuit court concluded that the referee erred as a matter of law in determining that the subject trust was an mqt. The circuit court also held that the referee erred in finding that the trust was revocable. The circuit court reasoned that the trust’s spendthrift provision was a sufficient basis on which to deem the trust irrevocable. The dss appeals as of right from the circuit court’s decision. We reverse.
Respondent argues that the lower court erred in deciding that a trust established by a legal guardian is not an mqt under 42 USC 1396a(k). We agree._
Statutory interpretation, as a question of law, is subject to review de novo on appeal. See In re Lafayette Towers, 200 Mich App 269, 273; 503 NW2d 740 (1993). Although appellate courts give an agency’s findings of fact deference, it is the appellate court’s proper role to review an agency’s legal findings. See Ludington Service Corp v Acting Comm’r of Ins, 444 Mich 481, 502; 511 NW2d 661 (1994), amended 444 Mich 1240 (1994). A court should overrule an agency’s longstanding interpretation of a statute it administers only for the most cogent of reasons. Majurin v Dep’t of Social Services, 164 Mich App 701, 704; 417 NW2d 578 (1987). An agency’s ruling regarding a question of law cannot be set aside unless a party’s substantial rights were prejudiced because of a substantial and material error of law. Id.
Congress enacted the Medicaid program in 1965, establishing a cooperative federal-state program in which the federal government reimburses states for a portion of the cost of medical care for needy persons. 42 USC 1396 et seq.; Schweiker v Gray Panthers, 435 US 34, 36; 101 S Ct 2633; 69 L Ed 2d 460 (1981). State participation in the program is voluntary, but states choosing to participate must comply with the federal statute’s requirements. Harris v McRae, 448 US 297, 301; 100 S Ct 2671; 65 L Ed 2d 784 (1980). The test for Medicaid eligibility is essentially a needs-based test, with coverage being denied if the applicant exceeds a ceiling in countable assets. As a general rule, funds in irrevocable trusts are not countable assets. However, Congress created an exception to this general rule by making certain irrevocable trusts, called mqts, countable as assets to the extent that a trustee has discretion to disburse funds from the trust, regardless of whether that discretion is exercised.
Before its repeal in 1993, the provision at issue in this case provided:
For purposes of this subsection, a "medicaid qualifying trust” is a trust, or similar legal device, established (other than by will) by an individual (or an individual’s spouse) under which the individual may be the beneficiary of all or part of the payments from the trust and the distribution of such payments is determined by one or more trustees who are permitted to exercise any discretion with respect to the distribution to the individual. [42 USC 1396a(k)(2).]
The secretary of the Department of Health and Human Services, through the Health Care Financing Administration (hcfa), has interpreted this language as it relates to the term "individual,” and has advised Medicaid-participating states regarding the proper administration of the law. In Chicago Regional State Letter No. 24-87 (November 1987), the hcfa articulated its interpretation of the situation where, as here, a guardian established a trust on behalf of a ward:
Section [1396a(k)j defines "individual” as the person who both establishes the trust (or whose spouse establishes the trust) and is beneficiary of the trust. We believe that a trust that is established by an individual’s guardian or legal representative, acting on the individual’s behalf, also falls under the definition of a Medicaid qualifying trust. If an individual is not legally competent, for example, a trust established by his legal guardian (including a parent) using the individual’s assets can be treated as having been established by the individual, since the individual could not establish the trust for himself. . . .
In cases where the beneficiary of a trust is a mentally retarded individual, [the amended act] provides that if a beneficiary of a trust is a men tally retarded individual who resides in an intermediate care facility for the mentally retarded, that individual’s trust is not considered a Medicaid qualifying trust provided the trust or initial trust decree was established prior to April 7, 1986 and is solely for the benefit of that mentally retarded individual.
However, Congress has implied that [s]ection [1396a(k)] applies to situations in which an individual’s legal guardian has established the trust on the individual’s behalf. Thus, by implication, all other trusts which have the characteristics defined in [§ 1396a(k)] and which are established for mentally retarded individuals (or others) would be considered Medicaid qualifying trusts. We have taken the position that almost all trusts for mentally retarded individuals are established for them by guardians, that the trust established by guardians or other legal representatives fall under the ambit of [§ 1396a(k)].
In its State Medicaid Manual, the hcfa has codified its foregoing interpretation in the following manner:
An "individual” is the person who both establishes the trust (or whose spouse establishes the trust) and is beneficiary of the trust. A trust that is established by an individual’s guardian or legal representative acting on the individual’s behalf, falls under the definition of a Medicaid qualifying trust. If an individual is not legally competent, for example, a trust established by his legal guardian (including a parent) using the individual’s assets can be treated as having been established by the individual, since the individual could not establish the trust for himself. [Health Care Financing Administration, Department of Health and Human Services, State Medicaid Manual, § 3215.1 (May 1989).]
In Forsyth v Rowe, 226 Conn 818, 826; 629 A2d 379 (1993), the Connecticut Supreme Court held that when a trust is funded with proceeds from the settlement of a personal injury claim brought by the guardian on the ward’s behalf, the ward, in effect, is the individual who established the trust. The Forsyth court specifically noted that "[a] trust is established by the person who provides the consideration for the trust even though in form it is created by someone else.” Id. at 826.
It is clear . . . from the purpose and history behind § 1396a(k) that a medicaid qualifying trust may also be "established ... by an individual” when that individual, acting through his conservator, provides the consideration for the trust. [Id. at 826-827.]
In this case, petitioner’s guardian established the trust for petitioner’s benefit, using consideration provided by petitioner through her inheritance. Accordingly, we hold that petitioner, through her guardian, is the individual who established the trust. Because the trust, in essence, was established by petitioner and petitioner is also the beneficiary of the trust, the trust constitutes an mqt and precludes petitioner from receiving Medicaid benefits.
We find persuasive the argument of the dss that when considered in its entirety, as opposed to focusing exclusively on the language in § 1396a(k) (2), the act should be read to include a guardian-established trust within the definition of an mqt. The Medicaid Act was amended in 1986 to close a loophole that had allowed individuals who were not otherwise eligible for public assistance to shield their assets in trusts in order to receive Medicaid. The sole exception provided for in the amended act involves situations where the trust beneficiary was a mentally retarded individual residing in an intermediate-care facility for the mentally retarded, the trust was established only for that individual’s benefit, and the individual’s trust was established before April 7, 1986. By carving out this narrow exception, Congress implicitly evidenced an intent to embrace all other trusts within the ambit of mqts. See Chicago Regional State Letter No. 24-87, supra.
This "intent of Congress” argument advanced by the dss has been adopted in other jurisdictions, see Striegel v South Dakota Dep’t of Social Services, 515 NW2d 245 (SD, 1994); Forsyth, supra; Hatcher v Dep’t of Health & Rehabilitative Services, 545 So 2d 400 (Fla App, 1989), and we find the reasoning compelling. The Medicaid program would be at fiscal risk if individuals were permitted to preserve assets for their heirs while receiving Medicaid benefits from the states. Forsyth, supra at 828. As the Striegel Court noted, under petitioner’s analysis, with the aid of an individual who was not a spouse, "[a]nyone and everyone could become eligible for Medicaid.” Striegel, supra, at .248. Such a restrictive interpretation of § 1396a(k)(2) would frustrate the purpose of the act, which is "to prevent wealthy individuals, otherwise ineligible for Medicaid benefits, from making themselves eligible by creating irrevocable trusts in order to preserve assets for their heirs.” Striegel, supra. While petitioner may not be a wealthy individual, if petitioner’s funds were not held in trust, she would be ineligible for Medicaid benefits and would be unable to preserve the funds for her heirs, one of whom is the guardian who created the trust.
We find equally compelling the argument implied by the Forsyth court that to construe the statute as petitioner urges would cause the statute to be constitutionally suspect. People v Capricci oso, 207 Mich App 100; 523 NW2d 846 (1994) (statutes should be construed in such a manner as to render them constitutional). As the Forsyth court noted:
It would be anomalous to construe the statute to allow a medicaid applicant to accomplish through a conservator or guardian acting on his behalf what the law prevents that applicant from doing on his own. [226 Conn 828.]
Adoption of petitioner’s position would produce a reading of the Medicaid Act in which a competent person would be treated less favorably than an incompetent person solely because of the latter’s disability. Specifically, petitioner’s reading of the statute would lead to a circumstance where, unlike the competent, the incompetent could retain their assets and still qualify for Medicaid; allowing the legally incompetent the advantage of using the Medicaid program as an estate-planning tool, a benefit denied to the rest of the population. See Striegel, supra; Forsyth, supra. While this discrimination would be arguably benign, it is still discrimination. A classification conferring a benefit on legal incompetents would not be rationally related to any government interest. In fact, that interpretation of the Medicaid Act runs counter to the purpose of the statutory provision, which is
to assure that individuals receiving nursing home and other long-term care services under Medicaid are in fact poor and have not transferred assets that should be used to purchase the needed services before Medicaid benefits are made available. [Striegel, supra at 247.]
Having determined that the agency’s interpreta tion of this statute was, at the least, not a substantial and material error of law, we must reverse the judgment of the circuit court and reinstate the decision of the referee. Petitioner’s Medicaid case was properly closed because of excess assets. Having resolved the case on this basis, we find it unnecessary to address the other issues raised.
Reversed.
This statute was repealed in 1993 under the Omnibus Budget Reconciliation Act. The amended statute applies to trusts established after August 10,1993. See 42 USC 1396 et seq. The issue we deal with here concerns trusts, like the trust for the benefit of petitioner, established before that date. | [
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Per Curiam.
Plaintiff appeals as of right from the dismissal, with prejudice, of her suit alleging medical malpractice. The dismissal was based on plaintiff’s failure to comply with a pretrial order requiring her to file a specific statement setting forth the "area of malpractice concerning each defendant and defendant’s failure to perform in relation thereto”.
Plaintiff concedes that a trial judge has the authority to dismiss an action where a party has failed to comply with a court order. Plaintiff claims, however, that its pretrial statement did comply with the judge’s order. We disagree and affirm.
GCR 1963, 504.2 permits the court to dismiss any action in which a plaintiff fails to comply with its orders. Dismissal may be ordered where a party fails to comply with a court’s order to amend pleadings to make them more specific. S & S Excavating Co, Inc v Monroe County, 37 Mich App 358, 362, 366-367; 194 NW2d 416 (1971). In the present case, the trial judge’s order to plaintiff to make her pretrial statement more specific was a valid one. Dismissal was an acceptable remedy for failure to comply. This Court need only decide whether the trial judge abused his discretion by deciding that plaintiff failed to comply with his pretrial order.
Plaintiff argues that dismissal was appropriate only if her complaint and pretrial statement, read together, failed to state a claim. We do not believe that the trial judge’s authority to dismiss a case for a party’s failure to comply with his orders is limited to complaints which fail to state a claim. GCR 1963, 301.1 requires a trial court to direct the parties’ attorneys to appear before it for a pretrial conference. It may direct the attorneys to state and simplify the factual and legal issues to be litigated. GCR 1963, 301.1(1). The same provision allows the court to direct the parties to consider the formal amendment of pleadings or to order such amendment if desirable or necessary. If the trial court’s power to direct pretrial summaries is limited to directing the amendment of pleadings, the language requiring the court to direct the attorneys to "state and simplify the factual and legal issues to be litigated” is rendered nugatory. We believe that GCR 1963, 301 was intended to allow the judge to require a far more specific statement of the issues to be litigated. One of the primary goals of the pretrial conference is to illuminate and narrow the issues to be litigated, thereby shortening trial proceedings. See 2 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 6. See also Applebaum v Wechsler, 350 Mich 636, 650; 87 NW2d 322 (1957). A trial judge has the authority to direct a party to make a pretrial summary which is more specific than a pleading sufficient to state a claim. Where discovery has been completed (as in this case), such a claim should not be difficult to make. A trial judge must have the discretion to treat a party’s failure to make an adequate pretrial statement as a failure to participate in pretrial proceedings. Where such a failure occurs, the trial judge must have the discretion to enforce his orders by appropriate sanctions. See Kromat v Vestevich, 14 Mich App 291; 165 NW2d 428 (1968).
In attempting to determine if the trial judge abused his discretion by dismissing plaintiffs complaint, we have reviewed the entire court file, particularly plaintiff’s various complaints and the pretrial statement and amendment thereto. We are satisfied that good and substantial reasons existed for the court’s order to plaintiff to specify more fully the factual and legal bases of her claims. Plaintiff had not adequately specified the standard of care, how the standard was breached, theories of causation, or the type of injury. She had not named an expert witness from whom this information could be obtained. Subsequent to defendant’s motions to dismiss, plaintiff did not seek to amend the pretrial statement to expose her claim more fully. We believe that the trial judge did not abuse his discretion by deciding to dismiss plaintiff’s complaint for failure to comply with his order.
Affirmed. Costs to appellees.
The relevant pleadings state:
"8. That the defendants], * * * and their agents and employees, were negligent and violated the standard of care in regard to the treatment, diagnosis and surgical procedures performed upon the plaintiff in one or more of the following ways:
"(a) They did not follow the standard of care in regard to performing a tubal ligation.
"(b) That they violated the standard of care in performing the tubal ligation by also damaging or injuring the plaintiff’s uterus and/or colon and other internal organs.
"(c) The defendants failed to follow the standard of care in regard to performance of the routine abortion which may also have been involved in this case; but instead, they caused injury and damage to the plaintiffs colon and/or uterus and other internal organs.
"(d) That the defendants, their agents and employees were guilty of violating the standard of care in regard to the surgical procedures involved in this case in other ways which will become more obvious through discovery.
"9. That as a result of the above-mentioned negligent acts of the defendant[s], the plaintiff suffered serious injuries which resulted in extensive hospitalization, medical care and treatment for a long period of time, which all would have been unnecessary had the original surgical procedure been performed properly.” (Complaint; first amended complaint.)
and
"3. That when the plaintiff was admitted to the hospital for surgery to be performed as described in the original complaint, in August of 1977, Dr. Jack Levitt was the anesthesiologist.
"4. That the defendant Dr. Levitt did perform the anesthesiology throughout the surgery in question during the hospitalization in August of 1977.
"5. That based upon the deposition of the defendant doctor performing the surgery and other evidence available to the plaintiff, the plaintiff believes that the defendant Jack Levitt was negligent and violated the standard of care in administering anesthesiology during said surgery in one or more of the following ways:
"(A) Failing to properly put in place a collar round the endotracheal tube.
"(B) That if the collar was installed, that it was improperly installed and put in place and improperly inflated.
"(C) That throughout the surgery that the defendant Levitt improperly failed to supervise and observe events occurring so as to prevent injury to the plaintiff from occurring from the improper installation or use of a collar described above.
"(D) That the defendant may be negligent in other ways which will become more obvious through discovery.
"6. That as a result of the negligence described above by the defendant Levitt, certain fluids from the stomach of the plaintiff went up the esophagus and came down the endotracheal tube into her lungs causing her severe injury and damage to her lungs and pulmonary system.” (Second amended complaint.)
Plaintiff’s response to the order to make her claim more specific, intended to be her final pretrial statement, was:
"The plaintiff claims that the current defendant doctor, Dr. Levitt, was negligent in administrating [sic] the anesthesia. Dr. Levitt indicated that he did not use a [sic] endotracheal tube although the hospital records indicate that the patient was 'intubated’. The plaintiff claims against Dr. Levitt that he violated the standard of care for administering anesthesia considering the type of surgery that was being done.
"In the alternative, the plaintiff claims against Dr. Colman and his assistant that if in fact Dr. Levitt intubated the patient or that the failure to use the endotracheal tube did not result in the plaintiffs damages, that Dr. Colman may have been negligent in either nicking the uterus or in causing some other type of abdominal injury which resulted in the plaintiffs injuries. The plaintiff submits that every doctor who has testified and reviewed this matter seems to have a different opinion as to what occurred.
"Responsibility on the part of the hospital may rest with the nursing staff and assistants who knew or should have known that the patient was to be intubated and they failed to do so since intubation is the normal procedure for this type of surgical procedure according to Dr. Colman.” (Pretrial statement, 12/21/81.) | [
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Per Curiam.
These consolidated cases arose when petitioner American Federation of State, County and Municipal Employees, AFL-CIO (afscme), petitioned to become the collective bargaining agent for direct care workers employed by nonprofit corporate respondents Cencare Corporation, Passages Community Services, and Community Residential Group, Inc. These respondents operate group homes for developmentally disabled adults. Implicit in the petition is the assertion that the targeted employees are public employees because the Michigan Department of Mental Health (mdmh) is a joint employer.
The Michigan Employment Relations Commission (merc) assumed jurisdiction and found that the mdmh is a joint employer. Although this result was similar to decisions reached in prior merc cases, the present case differed in that a different contract between the mdmh (by way of Wayne Community Living Services, an agency of the mdmh) and respondent providers was in effect. The mdmh contended that, under the new contract, the merc should have found that the mdmh was not a joint employer. This did not happen. Instead, after comparing the revised contract to the old contract, the merc determined that the revised contract was substantially the same as the prior one. The mdmh appeals as of right, and we affirm.
The mdmh first claims that the merc lacked subject-matter jurisdiction to hear these cases because of preemption under the National Labor Relations Act (nlra), 29 USC 141 et seq. We disagree. An employer that is a state or a political subdivision thereof does not come within the purview of the nlra. 29 USC 152(2). The mdmh is an exempt employer. In situations where an exempt employer exerts substantial control over an otherwise nonexempt employer, the National Labor Relations Board (nlrb) has declined to assert jurisdiction. AFSCME v Louisiana Homes, Inc, 203 Mich App 213, 221; 511 NW2d 696 (1994). Further, where an arguable case for preemption exists, and the nlrb has declined jurisdiction in parallel situations, the case need not first be submitted to the nlrb for determination of the preemption issue. Id. at 219-220.
Applying Louisiana Homes to the present case, the merc properly asserted jurisdiction because the nlrb had declined jurisdiction in parallel situations, and there was no requirement to submit the matter first to the nlrb for a determination of jurisdiction. Id.
The mdmh also claims that federal precedent should have been employed to determine whether the mdmh is a joint employer of the direct care workers. To Support its position, the mdmh cites AFSCME, Council 7 v Dep’t of Health, 78 Mich App 416; 260 NW2d 115 (1977). We note that AFSCME, Council 7 was a case of first impression. At the time that case was analyzed and decided, there was no Michigan precedent regarding the interpretation of joint employer under the Public Employees Relations Act (pera). Accordingly, this Court examined federal interpretation of § 8(d) of the nlra, 29 USC 158(d), along with Michigan precedent pertinent to related determinations. AFSCME, Council 7, supra, does not stand for the proposition that only federal precedent be followed in cases such as these. To the contrary, the Michigan Supreme Court, in St Clair Prosecutor v AFSCME, 425 Mich 204, 233; 388 NW2d 231 (1986), stated, "We are satisfied that the Court of Appeals has established sound precedent for the recognition of a coemployer status in collective bargaining.” On the basis of this explicit endorsement of Michigan precedent, the mdmh’s argument here is unavailing.
Affirmed. | [
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Williams, C.J.
The equal protection question presented in this case depends ultimately upon whether the Legislature intended 1935 PA 253, the Prison Reimbursement Act, to apply only to inmates of the three penal institutions named in the act, or to all inmates of the state prison system.
Defendants contend that the reference by name to the three penal institutions existing at the time of enactment of 1935 PA 253 means that the Legislature intended the act to apply only to those three prisons and not to any institutions later added to the corrections system. We hold that, while 1935 PA 253 referred by name to the three then-existing penal institutions in one procedural section of the act, it is clear from the text of the title and other sections of the act, as well as from the fact that all then-existing institutions were named in that single procedural section, that the Legislature intended 1935 PA 253 to apply to all prison inmates, including those in institutions which became operational after the act was passed. We therefore reverse the Court of Appeals decision upholding the trial court’s finding that the act violated the constitutional guarantee of equal protection of the laws.
Since the Court of Appeals did not reach a second issue of vagueness, and since that issue was not properly presented to this Court, we remand this case to the Court of Appeals for consideration of that issue. We do not retain jurisdiction.
I. Facts
The defendant, Hardy Wilson, had been injured on the job during his employment with the Pepsi-Cola Bottling Co. Wilson entered into a redemption through the Bureau of Workers’ Disability Compensation with defendant National Union Fire Insurance Co., Pepsi-Cola’s workers’ compensation insurer, for the amount of $12,500 or $10,306.51 after the subtraction of costs and attorney fees. At the time of the redemption order, Mr. Wilson was an inmate of the State Prison of Southern Michigan at Jackson.
On July 21, 1982, the Treasurer filed a complaint in Wayne Circuit Court seeking reimbursement under the Prison Reimbursement Act. An ex parte temporary restraining order was issued by that court enjoining National Union from paying the award.
A motion in opposition to the appointment of a guardian under the provisions of the act was filed by defendant Hardy Wilson, and a motion to dismiss was filed by defendant National Union.
At a hearing on October 29, 1982, plaintiffs claimed that National Union had violated the restraining order and had sent a check for $10,306.51 to Mr. Wilson’s mother, who had cashed the check and disbursed the funds. Defendants contended that the nonalienability provision of the Workers’ Disability Compensation Act, MCL 418.821; MSA 17.237(821) barred the state’s action, and that the Prison Reimbursement Act was unconstitutional.
The court took under advisement plaintiff’s motion for an order finding National Union in contempt for violating the restraining order, rejected defendants’ contention that the workers’ compensation statute prevented recovery, but agreed with defendants’ constitutional challenges, holding the Prison Reimbursement Act void for vagueness and violative of equal protection.
The Court of Appeals affirmed, 132 Mich App 648; 347 NW2d 770 (1984). On September 26, 1984, 419 Mich 935, we granted leave to appeal.
II. Introduction
The Prison Reimbursement Act, 1935 PA 253, states in its title that it is:
An act relative to the state penal institutions, and the care and maintenance of prisoners therein; and to provide for the reimbursement of the state on account thereof in certain cases.
Section 2 of the act states:
The warden of the state prison at Jackson, the branch of the state prison at Marquette, and the house of correction and reformatory at Ionia, shall forward to the auditor general a list containing the name of each prisoner, the county from which he was sentenced, term of sentence, date of admission, together with all information available on the financial responsibility of said prisoner. Such report shall be made on blanks to be furnished by the auditor general, and shall be made on or before the tenth day of each month. [MCL 800.402; MSA 28.1702.]
Section 4 outlines procedures for appointment of a guardian and grants discretion to the trial courts to order payment to the state, directing its application to residents of "any of the aforesaid state penal institutions . . . .” MCL 800.404; MSA 28.1704.
Section 4a states
[t]hat upon admission to any state penal institu tion the attorney general may file a claim for future maintenance and support of such prisoner with the court from which said prisoner was sentenced, and thereupon the court may make an order making such prisoner’s estate or property liable for such future care and support and that such claim shall constitute a lien upon all property, real and personal, of said prisoner. [Emphasis added. MCL 800.404a; MSA 28.1705.] •
The defendants, Mr. Wilson and National Union, argue that the act is limited by its plain language to inmates of the three prisons named in § 2, excluding inmates of other state penal facilities, and it therefore offends the Equal Protection Clauses of the United States and Michigan Constitutions by employing a wholly arbitrary classification. US Const, Am XIV; Const 1963, art 1, § 2.
The treasurer, appearing on behalf of the Department of Corrections, admitted at oral argument that the act would be unconstitutional if it were interpreted so as to apply only to residents of the designated prisons. Plaintiff points to the fact that the three penal facilities named were the only state prisons in existence when the act was passed in 1935 and contends that the act was intended to apply to all prisoners and has been so applied by the Department of Corrections.
We perceive the true question in this case to be whether the Prison Reimbursement Act does now in fact apply only to residents of the three named prisons. For the answer, we must look to principles of statutory construction.
III. Principles of Statutory Construction
The primary purpose of statutory construction is to discover and give effect to the intent of the Legislature. Aikens v Dep’t of Conservation, 387 Mich 495, 499; 198 NW2d 304 (1972); Melia v Employment Security Comm, 346 Mich 544, 562; 78 NW2d 273 (1956). Where the statutory language is of doubtful meaning, a reasonable construction must be given, looking to the purpose of the act. The statute’s spirit and purpose should prevail over its strict letter. Lakehead Pipe Line Co v Dehn, 340 Mich 25, 35; 64 NW2d 903 (1954).
The defendants argue that the plain meaning of the words used by the Legislature is to limit the reach of the statute to inmates of the three named facilities. They contend that the statute is clear and unambiguous and therefore not subject to judicial interpretation. City of Lansing v Lansing Twp, 356 Mich 641, 649; 97 NW2d 804 (1959).
We disagree. Read with the knowledge that the three prison facilities named were the only ones existing in 1935, common sense raises the question whether the Legislature intended 1935 PA 253 to apply to all state penal institutions. In ascertaining the intent of the lawmakers, where the language of a statute is of doubtful meaning, we may examine the conditions and circumstances surrounding its enactment. People v Hall, 391 Mich 175, 191; 215 NW2d 166 (1974).
Section 2, in which the three institutions are named, is not primarily concerned with the reach of the act, but rather refers to the wardens of the specified prisons in conjunction with directives regarding the implementation of the statute’s provisions. Put another way, the section does not say that inmates of these three prisons shall reimburse the state, but rather that the wardens of these three prisons shall provide certain information to the auditor general. There is no suggestion in the language of § 2 that the Legislature intended the reference to the three institutions to restrict the scope of the act and prevent its future application to inmates of prisons not then in existence.
Sections 4 and 4a are the substantive provisions of the act. Section 4, by referring to the "aforesaid” institutions, may be said to adopt the supposed limit of §2. Section 4a, however, refers to "any state penal institution . . . .” This disparity in language, read literally, would restrict the operation of some of the act’s provisions to the three named prisons, while allowing other provisions to continue to apply to all state prisoners as the system expanded over time. We do not believe the Legislature intended this result. A statute must be read in its entirety and the meaning given to one section arrived at after due consideration of other sections so as to produce, if possible, an harmonious and consistent enactment as a whole. Williams v Secretary of State, 338 Mich 202, 207; 60 NW2d 910 (1953).
It has long been the rule in Michigan that a literal construction of the words of a statute will not be given when contrary to the apparent intention of the Legislature. Heckathorn v Heckathorn, 284 Mich 677, 681; 280 NW 79 (1938); L A Darling Co v Water Resources Comm, 341 Mich 654, 662; 67 NW2d 890 (1955); People v Lynch, 410 Mich 343, 353-354; 301 NW2d 796 (1981).
In Attorney General v Detroit U R Co, 210 Mich 227, 254; 177 NW 726 (1920), app dis 257 US 609 (1921), this Court quoted the following passage from Endlich, Interpretation of Statutes, § 295:
Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This is done sometimes by giving an unusual meaning to particular words; sometimes by altering their collocation; or by rejecting them altogether; or by interpolating other words; under the influence, no doubt, of an irresistible conviction . . . that the modifications thus made are mere corrections of careless language, and really give the true intention.
Plaintiff draws our attention to the fact that the Department of Corrections has been applying the act to all inmates of the state penal system. This Court has long recognized that considerable weight should be afforded to a construction placed upon a statute by the department which administers it. Aller v Detroit Police Dep’t Trial Board, 309 Mich 382, 386; 15 NW2d 676 (1944); Magreta v Ambassador Steel Co, 380 Mich 513, 519; 158 NW2d 473 (1968).
Finally, we note that every statute passed by the Legislature is presumed to be constitutional, and a reviewing court should find an act invalid only when there is no reasonable interpretation which will sustain it. Cady v Detroit, 289 Mich 499, 505; 286 NW 805 (1939), app dis 309 US 620 (1940); People v McQuillan, 392 Mich 511, 536; 221 NW2d 569 (1974).
IV. Conclusion
In consideration of the above principles of statutory interpretation, we hold that the Legislature in 1935 intended the Prison Reimbursement Act to apply to all inmates of the state penal system and that it did not, by the directives employed in § 2, intend to withhold the application of the act to inmates of prisons yet to be constructed.
Reversed and remanded.
Levin, Cavanagh, and Boyle, JJ., concurred with Williams, C.J.
In December, 1984, the Legislature enacted an extensive amendment of the act, retitled the State Correctional Facility Reimbursement Act, 1984 PA 282, MCL 800.401 et seq.; MSA 28.1701 et seq., effective December 20, 1984. This case deals solely with the act prior to amendment, and all citations, in this opinion pertain to the 1935 act. | [
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Per Curiam.
In Docket Nos. 76435 (as of right) and 76564 (on leave to appeal granted), defendant appeals from his July 12, 1983, conviction, on plea of nolo contendere before Judge John E. Fitzgerald, Kalamazoo County Circuit Court, to one count of criminal sexual conduct in the first degree and the probation sentence with conditions imposed January 30, 1984, by Judge Robert L. Borsos, Kalamazoo County Circuit Court. In Docket No. 76578, the people have filed a claim of appeal from the sentence.
In the Fall of 1982, a complaint and warrant issued, charging defendant with two counts of criminal sexual conduct in the first degree arising from defendant’s acts of sexual intercourse with his 14-year-old stepdaughter in April and October, 1981. The complaint also charged three counts of criminal sexual conduct in the second degree arising from defendant’s sexual fondling of his 12-year-old stepson in January, 1982. The district court conducted a preliminary examination on October 21, 1982, and bound defendant over for trial on those charges. An information charging those offenses was filed November 1, 1982.
Defendant appeared before Judge Fitzgerald July 12, 1983, and offered to plead nolo contendere to one count of criminal sexual conduct in the first degree with the stepdaughter pursuant to an agreement that the other counts would be dismissed at sentencing. After advising defendant of the rights and privileges required by GCR 1963, 785.7, the court accepted defendant’s plea.
On October 18, 1983, Judge Fitzgerald met in chambers with the parties and counsel and discussed the sentence he intended to impose. It reportedly included a probation term, one year jail time and a requirement that defendant contribute to a rape counseling center for Kalamazoo County. At the conclusion of the hearing, Judge Fitzgerald made a brief statement on the record:
"The court has shared with counsel what its inclination is. The court obviously has not pronounced the sentence and therefore the matters that we discussed in chambers are exactly that: matters discussed in chambers and not a matter of public record and should be kept as such.”
The assistant prosecutor assigned to the case informed the victim’s father about the proposed sentence. When it became public, the Kalamazoo County Circuit Judges filed a grievance with the State Bar Grievance Commission against the assistant prosecutor. The commission later dismissed the grievance after the circuit court requested it be withdrawn and after the commission found no basis for action. In the meantime, the prosecution filed a motion to disqualify Judge Fitzgerald. On November 16, 1983, Judge Fitzgerald disqualified himself on his own motion because of those developments.
The chief circuit judge assigned the case by blind draw to Judge Richard Lamb. The prosecution moved to disqualify Judge Lamb because he joined in the circuit court’s grievance against the assistant prosecuting attorney. Defendant later filed a motion to disqualify the assistant prosecutor. On January 20, 1984, the assistant prosecutor withdrew his motion to disqualify Judge Lamb and requested that the case be assigned to another attorney within the prosecutor’s office. On January 25, 1984, Judge Lamb filed an opinion and order disqualifying himself on his own motion. That day Judge Fitzgerald, then chief circuit judge, reassigned the case to Judge Borsos.
On January 26, 1984, Judge Borsos gave the assistant prosecutor, defendant, and defense counsel sealed envelopes with the warning that the attorneys not open them until 9:00 a.m. Saturday,. January 28, 1984. The court allowed defendant to open his envelope in private sooner but directed him not to discuss the contents until after 9:00 a.m. Saturday. The envelope contained a two-page bibliography of medical articles dealing with drug treatment of male sex offenders, two articles from the American Journal of Psychiatry on the same subject, and a two-page description of the drug Depo-Provera from the Physicians’ Desk Reference. Defendant and the attorneys respected the limitations placed on the information by Judge Borsos, but a local newspaper reporter found out about the envelope and Judge Borsos received many phone calls from the media. So, about 10:00 a.m. on Saturday, January 28, 1984, Judge Borsos took a copy of the medical information to the local newspaper.
In the meantime, on January 26, 1984, Judge Borsos considered on his own motion the matter of his qualification to sentence defendant and filed an 11-page opinion in which he concluded that he was not disqualified. He set sentencing for January 30, 1984.
On January 27, 1984, defendant filed a motion to limit sentence to the sentence "imposed” by Judge Fitzgerald and, on January 30, 1984, a motion for reconsideration of Judge Borsos’s decision that he was not disqualified. At sentencing on January 30, 1984, the assistant prosecutor also filed a motion to disqualify Judge Borsos and defendant argued his motion to limit the sentence to that "imposed” by Judge Fitzgerald. Judge Borsos denied both motions. The assistant prosecutor then handed the court a written motion to refer the matter of disqualification to the chief judge pursuant to GCR 1963, 912.3(c)(1). Judge Borsos immediately denied the motion. The assistant prosecutor then took the position that the court lacked jurisdiction to proceed with sentencing and indicated an intention not to participate in the proceedings any further.
Defense counsel requested a five- to seven-day adjournment of sentencing in order to discuss with his client the possibility of withdrawing his plea. Judge Borsos refused an adjournment but offered to hear defendant’s motion to withdraw his plea. Counsel for defendant insisted that defendant was not in a position to make a rational decision on whether to retain or withdraw his plea. In light of that, Judge Borsos denied the motion for an adjournment.
The court proceeded to sentencing. Defendant declined an opportunity for allocution. His attorney spoke to the court on his behalf and contradicted some of the matters mentioned in the presentence report.
In a preamble to the sentence, Judge Borsos said, in part:
"Recently, however, there have been important scientific discoveries and medical studies on what medical people have always known to be true, that some men are truly over-sexed; they have a greater supply of male hormones that causes them to have much stronger sex urges than the normal male and are much less able to resist temptation; like a furnace which overheats a house if the thermostat is set too high.”
Judge Borsos said to defendant:
"On your behalf, there are many things that you are not. You are not a violent rapist who drags women and girls off the street and into the bushes or into your car from a parking lot; and I have had a lot of these in my courtroom, and I’m sure we have many in our community that I will see in the future, and we probably have some that I won’t see. You are not a child chaser, one whose obsession with sex causes him to seek neighborhood children or children in parks or in playgrounds, and we see these people in court. You are a man who has warm personal feelings for your stepchildren, but you let them get out of hand, and we see a number of people like you in our courts.”
Judge Borsos sentenced defendant to five years probation, with the first year in the county jail "with no credit for time you have already served”. Judge Borsos also ordered defendant to pay "to the County of Kalamazoo as court costs the sum of $25,000 for part of the expense the county has been put to by this case”. Finally, Judge Borsos ordered that defendant "within 30 days submit yourself to castration by chemical means patterned after the research and treatment of the Johns Hopkin[s] Hospital in Baltimore, Maryland, and continue same for the five years of your probation under the supervision of this court”. Judge Borsos reserved the matter of restitution until a later time.
In "post-sentencing remarks”, the court suggested that defendant might later want to make a contribution for a research and treatment center for sex offenders. He said:
"We need such a center, but I’m not making it part of the sentence. If after all the emotion dies down you feel that a community has treated you fairly and want to do something for Southwestern Michigan, the establishment of such a center would be a great thing. It might also make you feel that your life, like that of your ancestor W. E. Upjohn, was important to this community and that you left this world a better place for having been here.”
Judge Borsos denied defendant’s motion for bond pending appeal. Defendant began serving his sentence in the Kalamazoo County jail immediately after it was imposed.
On February 6, 1984, without notice to the parties, Judge Borsos filed a seven-page document which he entitled, "Supplement to Sentencing Remarks and Amendment to Order of Probation”. In those remarks, Judge Borsos defended the condition of probation that defendant submit to Depo-Provera treatment. In addition, he directed that the probation sentence would be set aside and that defendant would be resentenced if he did not voluntarily undertake the Depo-Provera treatment.
On February 17, 1984, Judge Borsos entered a formal order amending the order of probation in which he directed:
"That Term #14 be added to the probation order as follows:
"It was the intent of this court that Depo-Provera medication be an essential and an integral part of the probationary order in order to give reasonable assurance that throughout the five year probationary term that defendant would not be a danger to young chil dren. It was not the intent of this court to give probation with jail without this medical protection to the public.
"If, for any reason, it is not possible to carry out a course of treatment with Depo-Provera whether because of defendant’s failure to cooperate, an inability to obtain medical services to carry out such treatment, a medical evaluation which should indicate that such treatment would be harmful to the defendant or not be medically advisable, or for any other reason, or if some appellate court should determine that such a course of treatment making use of Depo-Provera to be inappropriate, unlawful, excessive, not within the trial court’s power to give, or not a proper term of probation, or shall set it aside for any other reason; then the entire probation shall be set aside for failure of the condition on which it was based and the defendant then be resentenced by this judge, his successor or by some other judge appointed to do so. The probation order shall be amended accordingly.”
This Court stayed the provision for Depo-Provera treatment pending appeal and consolidated the appeals. On March 5, 1984, Judge Borsos enforced the plea agreement by dismissing the remaining four charges against defendant.
Defendant’s primary argument on appeal is a challenge to the condition of probation which requires that he submit to Depo-Provera treatment.
Defendant argues that the condition of probation requiring the taking of Depo-Provera (what the trial court referred to as "castration by chemical means”) is unconstitutional and unlawful and, therefore, incapable of acceptance. Defendant argues that chemical castration is a form of sterilization which is unconstitutional as cruel and unusual punishment, a violation of fundamental rights of liberty, privacy, bodily integrity, equal protection, and procedural and substantive due process.
It is unnecessary to reach defendant’s constitu tional arguments because the condition of probation is an unlawful condition. It is elementary that appellate courts will not decide constitutional questions when the issue raised can be decided on alternative, nonconstitutional grounds raised in the appeal. See, for example, Lisee v Secretary of State, 388 Mich 32, 40, 41; 199 NW2d 188 (1972); Taylor v Auditor General, 360 Mich 146; 103 NW2d 769 (1960); 7A Callaghan’s Michigan Pleading & Practice (2d ed), § 57.06, pp 278-279.
Defendant argues that the condition of probation requiring him to take Depo-Provera is an unlawful condition, without common-law or statutory authority in Michigan and without precedent in any model act or judicial standard. In addition, defendant argues, the condition is punitive and was intended to be so by Judge Borsos. The condition is also impermissibly vague, unlawful as a disguised form of punishment, coercive, incapable of acceptance, and detrimental to his rehabilitation, defendant says.
The starting point for the analysis is the probation statute. MCL 771.3(4); MSA 28.1133(4) begins: "The court may impose other lawful conditions of probation as the circumstances of the case may require or warrant, or as in its judgment may be proper.” (Emphasis added.)
Depo-Provera is a medroxyprogesterone acetate manufactured by the Upjohn Company. The drug is similar to the progesterone hormones produced by the body naturally. Although the drug is used as a birth control agent in foreign countries, its only licensed use in the United States is for the adjunctive therapy and palliative treatment of certain inoperable, recurrent and metastatic uterine and kidney cancers. Physicians’ Desk Reference, p 1765 (34th ed, 1980). When administered to males, Depo-Provera lowers the level of testosterone, reduces the sex drive, and in most instances causes temporary impotence. "Clinically, it has been reported that subjects receiving the drug experience a lowered sex drive and a decrease in the frequency of erotic imagery.” Connecticut Department of Correction, Report of the Depo-Provera Study Group, p 3 (Hartford, Connecticut, October 4, 1983); see also State v Christopher, 133 Ariz 508; 652 P2d 1031 (1982); Dennis v State, 13 Md App 564; 284 A2d 256 (1971). However, the drug is not approved by the FDA for suppressing the sex drive in the male, but its experimental use for that purpose is allowed. The drug produces an alphabet of adverse reactions from acne to cancer to weight gain. Physicians’ Desk Reference, pp 1765, 1766. Long-term toxicology studies in monkeys, dogs, and rats disclose that the drug produces cancer in female organs, although the relevancy of any of those findings with respect to humans has not been established. Physicians’ Desk Reference, p 1765; Report of the Depo-Provera Study Group, supra, p 4.
Some sex offenders in other states have been given the voluntary option of participating in a Depo-Provera program as a condition of probation in very limited instances. However, our research reveals that no appellate court in the United States, either state or federal, has ever passed upon or approved either voluntary or mandatory treatment of sex offenders with medroxyprogesterone acetate or Depo-Provera. A witness in State v Christopher, supra, characterized Depo-Provera treatment as a "drastic alternative” to behavior modification.
Although Judge Borsos crudely referred to Depo-Provera treatment as "castration by chemical means”, the therapy is neither castration nor sterilization. Nor should Depo-Provera treatment be thought to be within the ambit of numerous cases which discuss sterilization (or sometimes castration) of sex offenders because, in all cases where sterilization is allowed, the sanction is specifically authorized by statute. See, for example, Anno: Validity of statutes authorizing asexualization or sterilization of criminals or mental defectives, 53 ALR3d 960. For a discussion of the validity of former Michigan legislation which allowed sterilization of mentally incompetent persons, see In re Salloum, 236 Mich 478; 210 NW 498 (1926); Smith v Wayne Probate Judge, 231 Mich 409; 204 NW 140 (1925); Haynes v Lapeer Circuit Judge, 201 Mich 138; 166 NW 938 (1918). It goes without saying that there is no statutory authorization in Michigan for treating sex offenders with medroxyprogesterone acetate.
Furthermore, even in the few studies undertaken to treat sex offenders with medroxyprogesterone acetate, participation was voluntary. In those cases, the chemical treatment was accompanied by psychotherapy. And, the subjects chosen for the studies were generally chronic, deviant, and dangerous sex offenders.
The originator of the treatment is Dr. Fred S. Berlin of Johns Hopkins Hospital, Baltimore. However, his definitive study, reported in 138:5 American Journal of Psychiatry, pp 601, 601-607 (May, 1981), has been criticized because, of the 20 patients included in the study, nine dropped out of treatment within one year and two others relapsed less than one year after treatment. Berlin & Meinecke, Treatment of Sex Offenders With Antiandrogenic Medication; 138:5 American Journal of Psychiatry, p 604 (May, 1981); Letter From Public Citizen Health Research Group to Connecticut Depo-Provera Task Force, p 5 (October 17, 1983). The Connecticut Department of Correction appointed a study group to consider the use of the drug for male sex offenders in 1983, but the committee rejected the proposal primarily because of the committee’s "very real concerns about the safety of this drug”. Report of the Depo-Provera Study Group, supra, p 8. A generally favorable report of medroxyprogesterone acetate therapy was made by Dr. Pierre Gagne, of Quebec, Canada, but he stressed that treatment be undertaken only voluntarily, accompanied by counseling and with the patient’s informed consent. 138:5 American Journal of Psychiatry; Gagne, Treatment of Sex Offenders With Medroxyprogesterone Acetate, pp 644-646 (May, 1981).
Michigan authorities cast doubt upon the validity of the condition. People v Becker, 349 Mich 476; 84 NW2d 833 (1957), strongly suggested, but did not decide, that sterilization would be an improper condition of probation. A condition of probation requiring defendant to leave the state during probation was contrary to public policy. People v Baum, 251 Mich 187; 231 NW 95 (1930). A condition requiring defendant to move from his neighborhood was struck down as without authority of law in People v Smith, 252 Mich 4; 232 NW 397 (1930). A condition of probation forbidding defendant to play professional basketball was not a lawful condition of probation. People v Higgins, 22 Mich App 479; 177 NW2d 716 (1970).
The Depo-Provera treatment prescribed by the trial judge also fails as a lawful condition of probation because it has not gained acceptance in the medical community as a safe and reliable medical procedure. See People v Young, 418 Mich 1; 340 NW2d 805 (1983); People v Gonzales, 415 Mich 615; 329 NW2d 743 (1982); People v Barbara, 400 Mich 352; 255 NW2d 171 (1977); People v Morse, 325 Mich 270; 38 NW2d 322 (1949); People v Cox, 85 Mich App 314; 271 NW2d 216 (1978).
There are myriad other problems with the condition, but special mention should be made of the virtual impossibility of performance of the condition. As noted, the use of Depo-Provera to reduce the sexual drive in male sex offenders is experimental only. The medical-psychiatric literature on the topic is limited. The practice is apparently limited to a few institutions. In light of that, the questions left unanswered by Judge Borsos’s order are, where is defendant to get the treatment (he’s in county jail for at least a year)? Who is to administer this treatment? What if, as defendant alleges, the medicine would be detrimental to his alleged heart and psychiatric conditions? Is defendant entitled to psychotherapy along with the drug treatment, as appears to be the practice in the studies referred to by the trial court?
What about the problem of informed consent? Even mentally incompetent persons, committed under court process, enjoy a greater degree of protection from extraordinary medical procedures. Chapter 6, § 629(3) of the Mental Health Code, dealing with civil immunity for authorizing medical services to wards, provides: "Routine medical services do not include extraordinary procedures. Extraordinary procedures includes [sic], but is not limited to, sterilization, including vasectomy, abortion, organ transplants from the ward to another person, and experimental treatment.” MCL 330.1629(3); MSA 14.800(629X3). (Emphasis added.) Even prison inmates enjoy greater protection. MCL 800.282; MSA 28.1622 limits prescribed drugs for inmates to those which are "necessary for the health of the person named * * * in [the] permit or prescription”. Moreover, drugs may be dispensed to prisoners "only pursuant to the written orders of a practitioner licensed to prescribe in accordance with his professional practice”. 1979 AC, R 791.658(2). Even a prisoner volunteering to participate in pharmaceutical research projects must give his informed written consent to the procedures and a statement of consent does not amount to informed consent unless:
"(a) All the terms and conditions of participation in the project, including the nature of the procedure involved, the degree of risk, and all other factors affecting the resident’s welfare, are explained to the resident in the presence of an employee of the department.
"(b) The witnessing employee executes a written statement that a full explanation has been made and that the resident has given consent without evidence of coercion or undue influence.” 1979 AC, R 791.6633(4), subds (a), (b).
None of the above considerations touch at all on defendant’s constitutional objections to the Depo-Provera treatment. Yet the considerations mentioned demonstrate overwhelmingly that the condition of defendant’s probation, that he submit to Depo-Provera treatment, is clearly an unlawful condition of probation and invalid under MCL 771.3(4); MSA 28.1133(4).
Since the condition is unlawful, we must next decide an appropriate remedy. Defendant contends that the unlawful condition should be set aside and the balance of the probation sentence (except the one year in jail requirement, which we discuss later) should be sustained. The people argue that resentencing is appropriate.
We reject defendant’s contention. Prior to People v Coles, 417 Mich 523; 339 NW2d 440 (1983), generally only the unlawful condition was vacated. People v Carl Smith, 69 Mich App 247, 249; 244 NW2d 433 (1976), observes:
"Several cases dealing with the validity of a portion of an order of probation impliedly indicate that where one condition of probation is found to be invalid, it does not necessarily follow that the whole order is invalid. People v Peterson, 62 Mich App 258, 270; 233 NW2d 250 (1975), People v Becker, 349 Mich 476; 84 NW2d 833 (1957), and People v Good, 287 Mich 110; 282 NW 920 (1938). The trial court’s correction of the initial infirm order was valid. See In re Cramer, supra.
"Consonant with the above cases, we hold that, where one of the conditions of probation is in violation of statute, the whole order of probation is not thereby invalid. The ordinary remedy, as in the above cases, is remand for entry of a proper order of probation.”
However, since People v Coles, supra, introduces sentence review into our jurisprudence, it can no longer be argued that, if a condition of probation is unlawful, only that condition is stricken and the balance of the sentence is sustained, where, as here, defendant not only attacks an invalid condition of probation but argues, in addition, that the one-year jail term is an abuse of discretion. Prior to whole sentence review, it was possible for a defendant to appeal and obtain relief from an improper condition of probation, People v Coles, supra, pp 531-532, but sentence review now opens the entire sentence to review to consider whether the sentence is excessively severe or excessively lenient. Coles, 417 Mich 542-543. By challenging the one-year jail provision, defendant is essentially arguing that the sentencing is excessively severe and he opens the full sentence to appellate review. It seems clear in this case that defendant has asked for appellate review under Coles by challenging the "severity” of the year in jail provision. Having challenged more than an improper condition of probation, defendant opens himself up to appellate review of the entire sentence under Coles:
"We next hold that an appellate court shall, upon a defendant’s request in an appeal by right or an appeal by leave granted, review a trial court’s exercise of discretion in sentencing, but may afford relief to the defendant only if the appellate court finds that the trial court, in imposing the sentence, abused its discretion to the extent that it shocks the conscience of the appellate court.” 417 Mich 550.
Since defendant challenges his sentence in this appeal, he should not be able to pick and choose the parts of his sentence he wants to attack and the parts he wants to preserve. It is therefore concluded that defendant’s sentence is subject to appellate review under Coles. Of course, Coles is otherwise applicable to this case because this is an appeal "filed after the date of this decision”. 417 Mich 551.
The standard of review of a sentence under Coles is whether "the trial court, in imposing sentence, abused its discretion to the extent that it shocks the conscience of the appellate court”. 417 Mich 550. We can understand, on the one hand, defendant’s point that there was no abuse of discretion. After all, at the time defendant was sentenced, first-degree criminal sexual conduct was a probationable offense. (It is not any longer. 1982 PA 470, approved December 30, 1982, makes criminal sexual conduct in the first degree nonprobationable. MCL 771.1; MSA 28.1131. However, the statute probably cannot be applied retroactively to defendant’s offense. See People v Moon, 125 Mich App 773, 780, fn 6; 337 NW2d 293 [1983]). In addition, Judge Borsos had before him many considerations which, if believed, could have led him to believe that probation was appropriate. Among those factors are defendant’s alleged history of medical and sexual abuse by his stepfather and stepbrother, defendant’s medical condition, the inordinate public exposure and damage to defendant’s name, reputation and business, the risk of sexual assault in prison, and the body of psychiatric evidence which holds that sexual abuse of children has serious emotional and psychological components.
However, probation in this case shocks our conscience because it is so significantly disproportionate to the sentences generally imposed upon similarly situated defendants. The Supreme Court in Coles was concerned not only with excessively severe or excessively lenient sentences but with significantly disproportionate sentences. The Court said:
"Another type of sentence alleged to constitute an injustice is the sentence which is significantly disproportionate to the sentences generally imposed upon similarly situated defendants who have committed similar crimes. For any one offense there is often a wide range of sentences available, and sentencing judges have demonstrated a significant variety of attitudes when it comes to deciding what constitutes an appropriate sentence. Thus, it is possible to find two defendants within the same prison system who have similar backgrounds, who were convicted of the same crime under similar facts and circumstances, and yet one is serving a disproportionately longer term of imprisonment. Such disparity in sentences, it is argued, does not merely result from permissible factors such as the culpability and background of the defendants; rather, it often arises from impermissible considerations such as the race of the defendant, his economic status, or the personal bias and attitude of the individual sentencing judge. Increased uniformity in sentencing similarly situated defendants is said to be in keeping with our constitutional concept of a unified judiciary in this state.” 417 Mich 545.
The probation sentence in this case is certainly disproportionate to the usual sentence given in criminal sexual conduct cases. In CSC I offenses involving defendants’ children or stepchildren, the usual sentences range from life to any term of years. In CSC I cases not involving defendants’ children or stepchildren, the sentences similarly range from life to a term of years. The presentence report in this case recommended a 15-year minimum.
In light of the above, the Court finds that the probation sentence in this case was an abuse of discretion.
Coles also moots defendant’s contention that resentencing would constitute double jeopardy. The specific remedy fashioned by the Court in Coles is precisely resentencing.
"If under this standard the appellate court deems that resentencing is warranted, the appellate court shall, after specifically stating its reasons for such action, remand the case to the trial court for resentencing. The trial court then may, upon resentencing, raise or lower the term of the defendant’s punishment in light of the concerns expressed by the appellate court.” 417 Mich 550-551.
We conclude that, under Coles, imposition of a greater sentence on resentencing under the Supreme Court’s authorization for sentence review would not violate defendant’s protection against double jeopardy. See United States v Di Francesco, 449 US 117; 101 S Ct 426; 66 L Ed 2d 328 (1980); see also United States v Wilson, 420 US 332; 95 S Ct 1013; 43 L Ed 2d 232 (1975); United States v Jenkins, 420 US 358; 95 S Ct 1006; 43 L Ed 2d 250 (1975), and Serfass v United States, 420 US 377; 95 S Ct 1055; 43 L Ed 2d 265 (1975).
On remand, consistent with Coles, the case will be assigned to a judge to be appointed by the State Court Administrator. Coles, 417 Mich 536.
With respect to the motions to disqualify Judge Borsos, GCR 1963, 912.3(c)(1) provides:
"The challenged judge must decide the motion. If the challenged judge denies the motion,
"(1) in a court having two or more judges, the challenged judge shall on request refer the motion to the chief judge, who shall decide the motion de novo.” (Emphasis added.)
By its plain terms, the subrule is mandatory.
In Jones v Jones, 132 Mich App 497; 347 NW2d 756 (1984), we held that the trial court erred by entering a judgment of divorce without first referring defendant’s motion for disqualification to another judge for de novo review under subrule 912.3(c). In that case, the parties agreed to a property settlement, but the trial court instructed plaintiffs attorney to draft a judgment which contained substantial variations from the parties’ agreed settlement. Defendant counsel moved to disqualify the judge, but the court denied the motion and entered judgment of divorce, which included terms not agreed to by the parties. This Court held that the trial court erred by incorporating terms in the judgment which were not agreed to by the parties and remanded for further proceedings. The Court also held that, even if defendant’s motion to disqualify the judge was untimely, the trial court should have referred the disqualification motion to another judge. The Court said:
"While in some circumstances it might not be improper for the trial court to continue with the proceedings prior to another judge’s ruling on the disqualification motion, this was not such a case. Defendant’s motion, even if deemed untimely, was not overly late. Moreover, the motion was not obviously frivolous, and nothing appears on the record which suggests that delaying entry of the judgment of divorce would have caused either the court or the parties any substantial inconvenience. On remand, prior to further proceedings on the merits of this case, defendant’s motion for disqualification shall be handled in accord with GCR 1963, 912.3(c)(1).” 132 Mich App 503.
In People v McDonald, 97 Mich App 425; 296 NW2d 53 (1980), vacated on other grounds (defendant’s death pending appeal), 411 Mich 870 (1981), defendant moved to disqualify the trial court from conducting a probation revocation hearing, but the court denied the motion and held that referral of the motion to the chief judge was unnecessary. The Court held that was not reversible error because defense counsel’s motion to disqualify the judge was late and his request to refer the disqualification motion to another judge was made well after the hearing was well in progress. Nevertheless, the Court was concerned that the qualifica tion of the trial court be established and so remanded for a hearing on the motion to disqualify before another judge. The Court said:
"Because we believe a party challenging the qualifications of a judge has a right, under present GCR 1963, 912, to a rehearing by another judge, this case is remanded to the chief judge of the Recorder’s Court for a hearing by another judge to be assigned by the court administrator on the motion to disqualify Judge Gillis. If it is determined that Judge Gillis was disqualified to conduct the probation revocation hearing, a new hearing is required; but if it is determined that he was not disqualified, the revocation and sentence will stand.” 97 Mich App 434.
In McDonald, the Court also suggested a procedure for handling motions to disqualify a judge.
"Whenever a challenged judge has denied a disqualification motion and a request for a hearing before another judge comes after a trial or hearing has started the challenged judge should have the option of proceeding with the trial or hearing unless a chief judge or a higher court orders that the trial or hearing be interrupted or delayed so that the disqualification motion may be considered by another judge before the trial or hearing is concluded. If the trial or hearing is continued the disqualification proceedings before another judge would be either rendered moot as untimely or conducted afterwards if so ordered. If conducted afterwards and the challenged judge is found to be disqualified, a new trial or new hearing could be held.” 97 Mich App 433-434.
The McDonald Court suggested that procedure "to maintain the efficiency of our courts operating with a court rule that imposes no time limit on requests that disqualification motions, denied by a challenged judge, be heard by another judge”. 97 Mich App 434. In this case, however, the assistant prosecutor’s motions to disqualify Judge Borsos and to refer the disqualification to another judge were both timely. Judge Borsos was not assigned to the case until January 25, 1984. The next day, Judge Borsos rendered an opinion on his own motion, finding himself not to be disqualified. He set sentencing for January 30, 1984. On that date, just five days after Judge Borsos was assigned to the case, the prosecutor filed his motion to disqualify Judge Borsos. As soon as Judge Borsos denied that motion, the prosecutor immediately filed a written motion to refer the disqualification motion to the presiding judge. Judge Borsos denied the motion on the grounds that "I’m not satisfied that it requires referral to the chief judge at this time”.
In light of the facts that the motion to disqualify was filed promptly and timely and that the motion to refer the disqualification to the chief judge was filed immediately upon denial of the request for disqualification, it is doubtful that the procedure in People v McDonald should apply here. Instead, the holding in Jones v Jones, supra, seems more applicable; Judge Borsos should have referred the disqualification motion to another judge for a de novo decision before proceeding further. Defendant would not have been prejudiced because he too sought an adjournment of sentencing. After the weekend revelation of the possibility that Judge Borsos would require Depo-Provera treatment, defendant wanted a five- to seven-day adjournment so he could coolly assess with his attorneys and psychiatrist the possibility of withdrawing his pleas. Judge Borsos denied that motion.
If Judge Borsos was disqualified to sentence defendant, the sentence is void. In re Hudson Lumber Co, 301 Mich 77; 3 NW2d 17 (1942); San dusky Grain Co v Sanalac Circuit Judge, 184 Mich 126; 150 NW 329 (1915); People v McDonald, supra. Although no de novo determination has been made whether Judge Borsos is disqualified or not, he is removed from the case. Judge Borsos joined in the circuit court bench’s grievance against the assistant prosecuting attorney. He imposed an illegal condition of probation. At this point, whether or not he was disqualified originally, the interests of justice require that he be removed from the case to avoid even the appearance of impropriety.
In light of our conclusion that the cause should be remanded for resentencing, we deal only briefly with other issues raised.
Defendant’s challenge to the one-year jail condition of probation is moot in light of our decision to remand. Nevertheless, we note that the condition is specifically authorized by MCL 771.3(2)(a); MSA 28.1133(2)(a). Even if the jail sentence might be said to impede defendant’s rehabilitation, it does address the other aims of sentencing: punishment of the wrongdoer, protection of society, and deterrence. People v Snow, 386 Mich 586, 592; 194 NW2d 314 (1972); People v Coles, supra, 417 Mich 550.
We reject defendant’s claim that no greater sentence can be imposed on remand than the sentence imposed by Judge Fitzgerald because of the assistant prosecutor’s misconduct in the case. Judge Fitzgerald did not impose a sentence. We find no misconduct on the assistant prosecutor’s part that would require that the discretion of the sentencing judge be limited on resentencing.
Finally, we decline to decide whether the prosecution can appeal the sentence in this case. The question of whether the people can appeal a sen tence is now before the Supreme Court in People v Robinson, 118 Mich App 220; 324 NW2d 795 (1982), lv gtd 417 Mich 884 (1983), and in People v Cooke, 113 Mich App 272; 317 NW2d 594 (1982), lv den 414 Mich 874 (1982). Both cases were argued before the Supreme Court in June, 1983. In People v Coles, the Supreme Court expressly reserved decision on the question of the prosecutor’s right to appeal a sentence. There the Supreme Court said:
"None of the cases before us are appeals which were initiated by the prosecutor. For that reason, and for the reasons that we have granted leave to appeal in several other cases involving the general issue of the prose-, cutor’s right to appeal, we take no position at this time regarding the prosecutor’s right to appeal the length of a defendant’s sentence. We recognize that there are valid arguments both in favor of and against the allowance of prosecutor-initiated appeals of sentences, but we will reserve decision on this issue for a more appropriate time.” 417 Mich 551.
In light of the fact that the question of the prosecution’s right to appeal a sentence is now before the Supreme Court and was expressly reserved by it in Coles for decision, it would be inappropriate for this Court to presume to decide the issue in this case. Nevertheless, we acknowledge with thanks the helpful and persuasive brief of the amicus curiae on this issue.
Defendant’s conviction is affirmed. His sentence is set aside on authority of People v Coles, supra, and the case is remanded for resentencing by a judge to be appointed by the State Court Administrator. In view of all the circumstances in this case and in order that the interests of justice be better served, the appointed judge shall not be from Kalamazoo County. An updated presentence report shall be prepared and the sentencing guidelines shall be applied pursuant to Supreme Court Administrative Order 1984-1, 418 Mich xxiv. Defendant shall be given credit on his sentence for time served in jail, both before conviction and under the original sentence. MCL 769.11a; MSA 28.1083(1).
Lastly, we emphasize that we intend the judge on resentencing to exercise the fullest range of discretion available under law, limited only by our holding here that probation was not an appropriate sentence in this case.
Defendants convicted of first-degree criminal sexual conduct have been placed on probation. People v Mock, 108 Mich App 384; 310 NW2d 390 (1981) (five years probation, $100 costs). Others have been sentenced to extensive terms of imprisonment. See, for example, People v Barfield, 411 Mich 700; 311 NW2d 724 (1981) (life); People v Roberson, 90 Mich App 196; 282 NW2d 280 (1979) (70-110 years); People v Price, 112 Mich App 791; 317 NW2d 249 (1982) (50-75 years). | [
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Per Curiam.
The facts of this case are set forth in City National Bank of Detroit v Westland Towers Apartments, 107 Mich App 213; 309 NW2d 209 (1981). Briefly stated, Westland Towers Apartments (Westland), a copartnership, was formed to construct a low- to moderate-income apartment project. The partnership was composed of two families, the Rismans (which included the Horaces) and the Granaders. The partnership agreement required a representative from each family to sign any agreement for it to be binding on the partnership. City National Bank of Detroit (cnb) had a copy of the partnership agreement.
The apartment project was to be financed by a nonrecourse mortgage loan insured by the Federal Housing Administration and supplied by J. M. Prentice Mortgage Company. However, cnb purchased ninety-seven percent participation in the loan and supplied nearly all of the funds. In order to obtain fha insurance, Westland was required to supply additional security. This additional security took the form of letters of credit issued by cnb. On November 3, 1972, Westland delivered a request to issue letter of credit DI-211 signed by Charles Granader and Donald E. Horace. At the same time, each individual partner signed a guarantee of Commercial Letter of Credit Liability covering letters DI-208 through DI-211. In reliance on the guarantees of liability, cnb issued the four letters of credit. DI-211, a letter of credit for $250,947, was signed by Donald Horace and Charles Granader and then delivered to Prentice.
In preparation for the "final endorsement,” Prentice requested that letter of credit DI-211 be extended. It was due to expire on May 3, 1975. On April 25, 1975, cnb informed Prentice that DI-211 would be extended. In reliance on this statement, Prentice did not present a sight draft against DI-211 before May 3, 1975.
On May 8, 1975, the partnership’s attorney met with the attorney for the Granaders and the attorney for the Rismans along with counsel for the Department of Housing and Urban Development at hud’s Detroit offices to close the final endorsement. Due to unspecified irreconcilable differences between the Rismans and the Granaders, the Granaders’ attorney, Jerome Gropman, walked out of the meeting. Later that day Gropman met with cnb’s attorney and negotiated a letter of extension which Gropman said he would advise the Granaders to sign. However, the Granaders never signed the letter of extension. On May 9, 1975, William Risman, for himself and by power of attorney for Robert Risman, signed a letter requesting that the letter of credit be extended. William Risman also signed a promissory note for the letter of credit. On May 9, 1975, cnb delivered an amended letter of credit purporting to extend the expiration of the previous letter of credit from May 3, 1975, to December 1, 1977. Although the extension was executed on May 9, 1975, it was dated May 3, 1975. On May 27, 1975, Prentice transferred DI-211 to the General National Mortgage Association (gnma). Cnb then received and paid sight drafts from gnma against the letter of credit totaling $250,947. Cnb made demand upon all of the defendants for reimbursement but all of the defendants refused to reimburse cnb. Thus the instant lawsuit was commenced.
This case has been decided three times in the circuit court on stipulated facts, always in favor of the defendants. Subsequent to this Court’s decision in 1981, the Supreme Court remanded the case to the circuit court for reconsideration of the unjust enrichment issue and cited Restatement Restitution, § 15, Comment f, p 66, and Restatement Agency, 2d, §§ 98 and 99. 413 Mich 938 (1982). In all other respects leave to appeal was denied. Upon remand, the circuit court once again entered a judgment of no cause of action in favor of defendants and against plaintiff. Once again, plaintiff appeals as of right and, once again, we affirm.
We first discuss ratification and affirmance, the definitions of which are found in Restatement Agency, 2d, §§ 82 and 83, and adopted by the Supreme Court:
When an agent purporting to act for his principal exceeds his actual or apparent authority, the act of the agent still may bind the principal if he ratifies it. The Restatement of Agency (2d), § 82, defines ratification thusly:
"Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.”
"Affirmance” is defined in section 83 of the Restatement:
"Affirmance is either
"(a) a manifestation of an election by one on whose account an unauthorized act has been done to treat the act as authorized, or
"(b) conduct by him justifiable only if there were such an election.” [David v Serges, 373 Mich 442, 443-444; 129 NW2d 882 (1964).]
In this case, Westland was the principal and William Risman the agent. According to this Court’s prior opinion, the elements were met for ratification. Whether there was "conduct by [West-land] justifiable only if there were such an election,” pursuant to § 83(b), is the issue in dispute. The Supreme Court directed the circuit court’s attention to §§ 98 and 99 of the Restatement to resolve this issue:
Section 98. Receipt of Benefits as Affirmance.
The receipt by a purported principal, with knowledge of the facts, of something to which he would not be entitled unless an act purported to be done for him were affirmed, and to which he makes no claim except through such act, constitutes an affirmance unless at the time of such receipt he repudiates the act. If he repudiates the act, his receipt of benefits constitutes an affirmance at the election of the other party to the transaction.
Section 99. Retention of Benefits as Affirmance.
The retention by a purported principal, with knowledge of the facts and before he has changed his position, of something which he is not entitled to retain unless an act purported to be done on his account is affirmed, and to which he makes no claim except through such act, constitutes an affirmance unless at the time of such retention he repudiates the act. Even if he repudiates the act, his retention constitutes an affirmance at the election of the other party to the transaction.
The circuit court held for defendants because it was not Westland who received and obtained the direct benefits but gnma. Our analysis shows that none of the benefits which both sides stipulated Westland received or retained meet the requirements of §§98 and 99 such that the receipt or retention of those benefits would constitute affirmance. Most of the benefits were not related to Risman’s "act purported to be done” for Westland. Westland’s claim to tax benefits was not through Risman’s act but through the tax code provisions related to partnership losses. The only alleged benefit that resulted from Risman’s act, the avoidance of likely foreclosure, was never stipulated to be a benefit to the partnership. The circuit court did not err in finding no cause of action against the plaintiff based on ratification by affirmance.
The second issue we review is that of unjust enrichment. The Supreme Court directed the circuit court to consider Restatement Restitution, §15:
Section 15. Mistaken Belief in Existence of Contract with Payee.
A person is entitled to recover money which he has paid another pursuant to the terms of the supposed contract with or offer from the other which, because of the payor’s mistake of fact as to the existence of consent, of consideration or of a required formality, he erroneously believed to exist, if he does not get the expected exchange.
The Supreme Court specifically cited Restatement Restitution, § 15, p 66, which states in part:
f. Where agent has no power to bind. Frequently a person is mistaken as to the existence of a contract with another because he deals with a purported agent who has no power to bind the other. In such case, if what he pays comes to the hands of the purported principal the transferor can recover the sum so paid unless such principal ratifies.
Thus, the relevant question is whether cnb paid another pursuant to the terms of the supposed contract with or offer from the other which, because of cnb’s mistake of fact regarding Risman’s authority to bind Westland, cnb erroneously believed to exist.
There are three distinct contracts implicated in a letter of credit transaction. The first is between the issuer (cnb) and its customer (Westland). The second is between the issuer (cnb) and the beneficiary (Prentice, then gnma). The third is between the customer (Westland) and the beneficiary (Prentice, then gnma). United Technologies Corp v Citibank, N A, 469 F Supp 473, 477 (SD NY, 1979); Easton Tire Co, Inc v Farmers & Merchants Bank, 642 SW2d 396, 398 (Mo App, 1982). The obligations created by these contracts are separate and distinct. As stated in the Official Uniform Commercial Code Comment to UCC 5-114:
1. The letter of credit is essentially a contract between the issuer and the beneficiary and is recognized by this Article as independent of the underlying contract between the customer and the beneficiary (See Section 5-109 and Comment thereto). In view of this independent nature of the letter of credit engagement, the issuer is under a duty to honor the drafts or demands for payment which in fact comply with the terms of the credit without reference to their compliance with the terms of the underlying contract. . . . The duty of the issuer to honor where there is factual compli anee with the terms of the credit is also independent of any instructions from its customer once the credit has been issued and received by the beneficiary. See Section 5-106.
See also MCL 440.5114; MSA 19.5114.
The parties have failed to separately consider the separate agreements and thus confused their analysis of the facts in this case. Returning to the language of the Restatement, cnb paid gnma pursuant to its contractual obligations to Prentice, which were subsequently transferred to gnma. There was no mistake of fact underlying cnb’s contractual relationship with Prentice and gnma. There was a letter of credit issued to Prentice as the beneficiary and cnb extended its obligation to honor the letter of credit prior to its expiration. This extension of obligation was not based on any mistake of fact regarding Risman’s authority to bind Westland. Risman did not attempt to bind Westland until two weeks later, one week after the letter of credit would have expired. When cnb extended a letter of credit, it did not have any legitimate "expected exchange” because Westland had not yet agreed to an extension.
There was a separate agreement between cnb and Westland such that cnb would issue a letter of credit and Westland would be liable to reimburse cnb for any money properly paid on the letter of credit. That agreement expired on May 3, 1975. There may have been a mistake of fact regarding whether Westland extended its obligation to pay on May 9, 1975, when Risman signed the request for an extension of DI-211. However, cnb did not pay gnma pursuant to its agreement with Risman or Westland. Cnb created or extended a separate obligation with Prentice on April 25, 1975, to pay pursuant to the letter of credit which was later transferred to gnma. Cnb paid gnma pursuant to this separate obligation.
In the language of Comment f to Restatement Restitution, § 15, cnb was "mistaken as to the existence of a contract with another [Westland] because he [cnb] deal[t] with a purported agent [Risman] who ha[d] no power to bind the other [Westland].” Therefore, if cnb had made a payment pursuant to its agreement with Risman, Westland might be held accountable for restitution if the money had come into its hands. However, cnb made payment pursuant to a separate and distinct agreement with Prentice. Therefore West-land is not liable for restitution.
What happened in this case is that cnb extended its obligation to Prentice without first obtaining any corresponding agreement from Westland. We refuse to hold Westland liable for cnb’s negligent banking practices simply because gnma applied the $250,947 to Westland’s mortgage obligations. Restatement Restitution, § 15, p 66, offers no rationale for holding Westland liable for cnb’s negligent extension of obligation to pay Prentice on letter of credit DI-211.
Plaintiff has raised two other issues in its brief on appeal. The first concerns this Court’s 1981 opinion regarding its interpretation of the Uniform Partnership Act in holding that cnb knew that William Risman did not have authority to bind the partnership and therefore cnb could not recover from Westland on the letter of credit. The second concerns this Court’s 1981 decision in holding that William Risman was not personally responsible on the letter of credit for failure to bind the partnership.
The Supreme Court denied leave to appeal hut reversed this Court in part on the issue of unjust enrichment. Since the application for leave to appeal was denied, the decision of this Court became the final adjudication, except as to the issue of unjust enrichment. GCR 1963, 853.2(2), now MCR 7.302, subds (A), (C), (D), and (F). Defendants correctly argue that this Court should not reconsider its prior opinion based on the "law of the case” doctrine:
The law of the case doctrine dispenses with the need for this Court to again consider legal questions determined by our prior decision and necessary to it. As generally stated, the doctrine is that if an appellate court has passed on a legal question and remanded the case for further proceedings, the legal questions thus determined by the appellate court will not be differently determined on a subsequent appeal in the same case where the facts remain materially the same. Corporation & Securities Comm v American Motors Corp, 379 Mich 531; 152 NW2d 666 (1967); Palazzolo v Sackett, 254 Mich 289; 236 NW 786 (1931); American Ins Co of Newark v Martinek, 216 Mich 421; 185 NW 683 (1921); Allen v Michigan Bell Telephone Co, 61 Mich App 62; 232 NW2d 302 (1975); Topps-Toeller, Inc v Lansing, 47 Mich App 720; 209 NW2d 843 (1973). [CAF Investment Co v Saginaw Twp, 410 Mich 428, 454; 302 NW2d 164 (1981).]
Plaintiff does not cite any new facts but seeks reinterpretation of law previously construed in this Court’s 1981 opinion. Reconsideration by this Court is barred by the "law of the case” doctrine. Decisions of this Court are final except as reviewed by the Supreme Court. GCR 1963, 800.4, now MCR 7.201(D). Case law and court rules clearly state that these issues are not reviewable.
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Mackenzie, P.J.
Plaintiffs appeal by leave granted from the circuit court’s order denying their motion brought under GCR 1963, 528.3 to set aside an order dismissing with prejudice their suit against defendants. The concise statement of facts, stipulated to by the parties and certified by the circuit court, provides in pertinent part as follows:
"1. Plaintiffs claim that on April 25, 1980, they retained the services of Attorney Kenneth E. Kraepel to pursue claims for personal injuries against defendants arising out of an automobile accident which occurred on April 19, 1980.
"2. Attorney Kraepel proceeded to institute suit against defendants in the Circuit Court for the County of Wayne. Discovery proceedings were pursued, and the parties engaged in settlement negotiations. Plaintiffs allege that on or about March 16, 1981, without their knowledge and without their express or implied consent, Attorney Kraepel accepted from defendants $17,-000 in settlement of this suit and forged plaintiffs’ signatures upon releases tendered to defendants and upon the checks presented by defendants and made payable to plaintiffs and Attorney Kraepel.
"3. On March 19, 1981, pursuant to a stipulation for dismissal signed by Attorney Kraepel and defendants’ attorney, an order for dismissal dismissing the matter with prejudice and without costs was entered.
"4. Plaintiffs claim that they did not discover the fact that their action had been dismissed until late in 1981, when, in a phone call to defendants’ counsel, they were advised that the case had been settled.
"5. On or about January 25, 1982, the Attorney Grievance Commission instituted an action against Attorney Kraepel based upon his unauthorized settlement of plaintiffs’ suit and his misappropriation to his own use of the $17,000 paid by defendants. On this same date, Mr. Kraepel executed a stipulation and order revoking his license to practice law.
"6. On January 28, 1982, plaintiffs secured new counsel to represent their interest in this suit and on March 25, 1982, motions were filed to substitute counsel and to set aside the dismissal of this cause. Plaintiffs have also filed claims with the State Bar of Michigan Client Security Fund.
"7. On two occasions, the trial court heard oral arguments on plaintiffs’ motion to set aside order of dismissal. Between the time of those arguments, the parties were given the opportunity to file additional briefs. Thereafter on April 22, 1982, the circuit court entered an order denying plaintiffs’ motion to set aside the order of dismissal.”
Neither on appeal nor below have defendants disputed plaintiffs’ allegation that at no time did they authorize or consent to the settlement of $17,000 accepted by their attorney and that they did not discover the settlement and dismissal until November of 1981.
The denial of a motion for relief from a judgment brought under GCR 1963, 528.3 will not be disturbed on appeal absent a clear showing of an abuse of discretion. Lark v Detroit Edison Co, 99 Mich App 280, 282; 297 NW2d 653 (1980), lv den 410 Mich 906 (1981). Relief may be granted under GCR 1963, 528.3(6) for "any other reason justifying relief from the operation of the judgment” if subsections (1) through (5) are inapplicable, extraordinary circumstances exist which warrant setting aside the judgment in order to achieve justice, and the substantial rights of the opposing party will not be detrimentally affected by setting aside the judgment. Lark, supra, p 284; Kaleal v Kaleal, 73 Mich App 181, 189; 250 NW2d 799 (1977), quoting Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 189. The only subsection other than (6) of GCR 1963, 528.3 which might at first blush appear applicable is (3), but a close reading reveals that (3) is limited to fraud, misrepresentation, or other misconduct "by an adverse party”. In the present case, the misconduct was engaged in by plaintiffs’ own attorney, and it is undisputed that defendants were not responsible for that misconduct.
The circuit court denied plaintiffs’ motion by determining that Henderson v Great Atlantic & Pacific Tea Co, 374 Mich 142; 132 NW2d 75 (1965), was inapplicable to the instant case. The Supreme Court in Henderson, supra, held that a settlement of the plaintiff’s claim, entered into by the plaintiff’s attorney without the plaintiff’s authorization and the proceeds of which the attorney converted to his own use, was not binding on the plaintiff and did not bar her suit against the defendant, even though the defendant entered into the settlement in good faith and was innocent of any wrongdoing. In so holding, the Court explained:
"The principle which governs this case is set forth in 66 ALR 107 et seq., as supplemented in 30 ALR2d 944 et seq., as follows:
" 'The almost unanimous rule, laid down by the courts of the United States, both Federal and State, is that an attorney at law has no power, by virtue of his general retainer, to compromise his client’s cause of action; but that precedent special authority or subsequent ratification is necessary to make such a comrpomise valid and binding on the cleint.’ (Citing numerous cases.)
"The above rule has been adhered to in Michigan in Eaton v Knowles, 61 Mich 625 [28 NW 740 (1886)]; Fetz v Leyendecker, 157 Mich 355 [122 NW 100 (1909)]; Peoples State Bank v Bloch, 249 Mich 99 [227 NW 788 (1929)]; and most recently in Wells v United Savings Bank of Tecumseh, 286 Mich 619 [282 NW 844 (1938)].” 374 Mich 147. (Footnote omitted.)
See also Michigan Nat’l Bank of Detroit v Patmon, 119 Mich App 772, 775; 327 NW2d 355 (1982); Presnell v Wayne Bd of County Road Comm’rs, 105 Mich App 362, 365; 306 NW2d 516 (1981).
The trial court agreed with defendants that the rule of Henderson was inapplicable because in that case there was conflicting testimony regarding whether the miscreant attorney, Davies, had assumed control of the plaintiffs case. Davies contended that he was responsible for the conduct of the case, while his law partner, Chalfin, who entered into the contingent agreement with the plaintiff, claimed he merely told Davies to work on the case and that he (Chalfin) remained personally responsible. Henderson, supra, p 144. However, our reading of Henderson leads us to conclude that this circumstance was not determinative of the result reached in that case. Rather, the Court stated that it found the settlement was not a bar to the plaintiffs suit because there was "nothing in the record to indicate that Davies had authority from plaintiff to compromise her claim against defendant”, Henderson, supra, p 147 (emphasis added), and not because Davies lacked authority to represent the plaintiff. The Henderson Court made no determination as to whether Davies did indeed have authority to represent the plaintiff because, even if he did, under the above-quoted rule adopted by the Court, he lacked precedent special authority to enter into the settlement and the plaintiff did not subsequently acquiesce in or ratify the settlement. Thus, we find that the court ered in finding Henderson, supra, inapplicable on this ground.
Defendants also contend that Henderson, supra, is inapplicable to the present case because here plaintiffs seek to vacate a court order of dismissal, whereas Henderson dealt only with whether an extrajudicial settlement agreement barred the plaintiffs suit. Thus, defendants would limit the application of the above-quoted rule adopted by the Henderson Court to cases where the settlement agreement was not reduced to a consent judgment or a court order of dismissal. Defendants urge that the rule applicable to the present case is that an attorney has implied authority to settle his client’s claim and, if the client fails to deny or repudiate that authority before a court order or judgment is entered, this works as a ratification of the settlement by the client. Defendants rely on Jackson v Wayne Circuit Judge, 341 Mich 55; 67 NW2d 471 (1954); Bielby v Allender, 330 Mich 12; 46 NW2d 445 (1951), and Tudryck v Mutch, 320 Mich 99; 30 NW2d 518 (1948). These three decisions all involved situations, similar to the present case, where the clients sought relief from consent judgments, entered on the basis of settlement agreements made by their attorneys, on the ground that they had not authorized or consented to the settlements and the Supreme Court affirmed denial of relief. However, those cases are factually distinguishable. In Jackson, supra, one of the clients had authorized the settlement, and there was no showing of fraud or deceit on the part of the attorney. In Bielby, supra, the client had made representations to his attorney which caused the attorney to believe that the settlement was agreeable to the client. Finally, in Tudryck, supra, there was convincing evidence that the client had authorized the settlement.
Moreover, although there is some language in Jackson, Bielby, and Tudryck which tends to support the rule of law advocated by defendants, we do not find that language controlling. Rather, we believe it proper to follow the rule pronounced in the more recent case of Henderson, supra, that a settlement, made by an attorney without prior special authorization and which was not subsequently ratified by the client, is not binding on the client, and hold that this rule applies equally to cases where relief from a judgment or court order is sought. Indeed, federal courts have recognized that relief from a judgment may be granted where the judgment was entered pursuant to a settlement not authorized or ratified by the client. Smith v Widman Trucking & Excavating, Inc, 627 F2d 792, 796 (CA 7, 1980); Bradford Exchange v Trein’s Exchange, 600 F2d 99, 102 (CA 7, 1979); Thomas v Colorado Trust Deed Funds, Inc, 366 F2d 136, 139 (CA 10, 1966).
Furthermore, the only possible justification for limiting Henderson, supra, to cases where relief from an extrajudicial settlement is sought, and applying a stricter rule where relief from a judgment or court order is sought, is the interest in promoting the finality of those judgments or orders. However, that interest must be balanced against the goal of remedying injustice. Contrary to defendants’ assertions, plaintiffs’ remedy of recovering the $17,000 settlement from attorney Kraepel, the bank which negotiated the forged check, or the Michigan Client Security Fund is not sufficient to prevent injustice, since plaintiffs never agreed to or ratified that settlement figure as representing adequate compensation for their claim. In addition, under the rule advocated by defendants, plaintiffs would not be entitled to relief from the order dismissing their suit because they failed to deny or repudiate attorney Kraepel’s authority to settle before the dismissal order was entered, even though it is undisputed that plaintiffs had no notice of the settlement until after the order was entered.
We do agree with defendants on one matter: where a party moves for relief from a judgment under GCR 1963, 528.3 on the ground that his or her attorney had no authority to enter into a settlement, it is to be presumed that the attorney had authorization and the movant must overcome that presumption. The federal courts have followed this approach where relief from a judgment is sought on this ground. Smith, supra; Bradford Exchange, supra; Thomas, supra. Our Supreme Court in Bielby, supra, p 15, also spoke of the presumption that an attorney of record has his client’s authorization in confessing judgment. Those Michigan cases referring to the burden being on the opposing party to show authorization or ratification all involved situations where, though there was a settlement agreement, no court order or judgment had been entered which one of the parties was attempting to set aside. Peoples State Bank For Savings v Bloch, 249 Mich 99, 104; 227 NW 778 (1929); Michigan Nat’l Bank, supra, p 777. We believe that the interest in promoting the finality of court judgments and orders justifies a presumption of validity and authorization which the movant must overcome. However, in applying this presumption, courts should bear in mind the difficulty of proving a negative, such as the absence of authorization or ratification.
Plaintiffs satisfied their burden in the present case, and we find that the circuit court abused its discretion in denying plaintiffs’ motion to set aside the dismissal order. Applying the rule of Henderson, supra, it was undisputed that plaintiffs did not specially authorize attorney Kraepel to settle and stipulate to dismissal. Nor was there any indication that plaintiffs ratified or acquiesced to the settlement and dismissal. That plaintiffs are apparently pursuing recovery of the $17,000 from the bank or the Michigan Client Security Fund does not represent ratification, but, as plaintiffs admit, any recovery shall be deducted from any award of damages plaintiffs obtain in their lawsuit against defendants. Extraordinary circumstances were presented here justifying relief under GCR 1963, 528.3(6), and defendants have failed to show that affording plaintiffs relief will pose a detriment to their substantial rights. Lark, supra; Kaleal, supra. While defendants assert harm to their right to rely on the settlement, we do not perceive this to be a substantial right warranting denial of relief to plaintiffs, given the circumstances under which the settlement was made. Also, although defendants point to the approximately one-year delay between the dismissal order and plaintiffs’ motion to set aside, defendants do not show specifically how this delay has prejudiced them, and we cannot say that plaintiffs unreasonably delayed in bringing the motion once they discovered that their suit had been dismissed.
Reversed and remanded for entry of an order granting plaintiffs’ motion and setting aside the earlier order of dismissal. Costs to appellants. | [
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R. B. Burns, J.
We granted leave in this medical malpractice case to consider the trial court’s denial of plaintiffs’ motion to compel the production of certain documents. Interlocutory review is warranted because of the damage to plaintiffs’ case if discovery is denied.
Decedent had been treating with Dr. O’Brien since 1972. Around August 28, 1981, decedent went to O’Brien’s office with various physical complaints. O’Brien scheduled him for a complete gastrointestinal (gi) study. For four days in the following two weeks, decedent went to defendant Bi-County Community Hospital on an outpatient basis for radiologic testing. O’Brien obtained the x-rays from Bi-County and, apparently relying on the radiologist’s interpretation, concluded that decedent was not suffering from a malignancy. After reviewing the x-rays himself, O’Brien completely ruled out a gastrointestinal malignancy. Decedent continued treating with O’Brien until November 20, 1981. By that time, O’Brien believed that decedent did, in fact, have a malignancy.
After conferring with a gastroenterology specialist, O’Brien concluded that, although it was not an emergency, decedent should be hospitalized. The specialist agreed to take care of decedent’s admission to Bi-County. However, the hospital was unable to admit him for a week or more. Decedent’s wife consulted with another physician and decedent was immediately admitted to Beaumont Hospital on November 23, 1981.
Decedent was diagnosed as suffering from an abdominal malignancy of either the Gi tract or pancreas. He died on November 26, 1981. The cause of death was determined to be a cardiac arrest due to a carcinoma of the pancreas which had metastasized to the liver and peritoneum.
In their complaint, plaintiffs allege negligence on behalf of Bi-County and its employees by failing to diagnose decedent’s cancer, failing to order additional testing, failing to admit decedent as a patient as requested by O’Brien, failing to report decedent’s condition to O’Brien, failing to properly prepare or instruct decedent prior to preparing the gi examination, and failing to prohibit O’Brien from attempting to admit patients such as decedent, or attempting to surreptitiously admit patients through other physicians when O’Brien did not have full admitting privileges at Bi-County.
On February 11, 1984, plaintiffs filed a notice to produce certain documents and items. The request to produce was not honored and, on September 12, 1984, plaintiffs filed a motion to compel production or, in the alternative, for an in camera inspection of the documents. The motion was brought pursuant to GCR 1963, 310, now MCR 2.310. Defendants subsequently produced some of the documents, but filed written objections to a number of the requests.
On May 10, 1985, plaintiffs renewed their motion, but brought the motion under the recently adopted court rules, specifically MCR 2.302(B), 2.305(B), 2.306(B), 2.310, 2.313, and 2.314(D). Plaintiffs sought production of the documents not yet voluntarily produced by defendants. Plaintiffs ac knowledged a willingness to stipulate to the entry of a protective order restricting the use of documents claimed to be privileged or of a sensitive nature. Plaintiffs also requested an in camera inspection of any documents for which the discoverability continued to be challenged. The motion was denied and this appeal was filed.
For reasons that will become apparent, we must first determine whether the 1963 court rules or the 1985 court rules apply to this issue. MCR 1.102 provides:
These rules take effect on March 1, 1985. They govern all proceedings in actions brought on or after that date, and all further proceedings in actions then pending. A court may permit a pending action to proceed under the former rules if it finds that the application of these rules to that action would not be feasible or would work injustice.
Thus, the norm is to apply the newly adopted court rules to pending actions unless there is reason to continue applying the old rules. In this, defendants argue that the old rule pertaining to discovery, namely GCR 1963, 310, should be applied to this case since it was the controlling rule at the time of plaintiffs’ initial request and that injustice would result if the new rules were applied.
Defendants’ first argument, that GCR 1963, 310 should control since that was the rule in place at the time plaintiffs first brought the motion to produce, is unpersuasive. We are not faced with a situation in which a case or an issue was disposed of under the prior court rules and a party seeks to reopen the question under the new rules where the new rules would effect a different result. See Genesee Merchants Bank & Trust Co v Bourrie, 375 Mich 383; 134 NW2d 713 (1965) (motion for delayed rehearing brought under new rules, when dismissal was granted under prior rules). In this case, the only action taken by the trial court was to order defendants to either produce the documents or file written objections. Defendants agreed to produce some documents, but filed written objections as to the remainder. No action was apparently taken on the unproduced documents until May, 1985, when plaintiffs brought a new motion to produce the documents, this time relying on the newly adopted court rules. Although the discovery procedure was commenced under the old rules, that does not prevent the procedure from being completed under the new rules.
Defendants also argue that application of the new rules would work an injustice as to defendants. Defendants do not explain what this "injustice” is, but presumably it is that the new rules may be more favorable to plaintiffs than the old rules. However, an injustice is not present merely because a different result would be reached under the new rules. Rather, we believe the type of injustice that MCR 1.102 concerns itself with is that which is caused by a party’s reliance on the prior rules. That is, an injustice is committed where a party acts, or fails to act, in reliance on the prior rules and his action or inaction has consequences under the new rules which were not present under the old rules. See Solosth v Pere Marquette R Co, 255 Mich 62; 237 NW 554 (1931) (party failed to make timely jury demand in reliance on prior court rule). In this case, defendants do not argue that they relied to their detriment on the prior court rules. Although the result may be different under the new rules, no injustice will result by applying these rules.
Since it is feasible to apply the new court rules and no injustice will result by applying them, we shall proceed by applying the 1985 court rules.
Although our resolution of this issue will be based on the 1985 court rules, we must nevertheless consider the 1963 rules. GCR 1963, 310.1(1) provided for the trial court to order the production of documents upon motion of any party. Although not specifically provided for in the court rule, a good cause requirement has been construed by the Supreme Court as a prerequisite to the granting of a motion for the production of documents. Daniels v Allen Industries, Inc, 391 Mich 398, 406-407; 216 NW2d 762 (1974); Covington Mutual Ins Co v Copeland, 382 Mich 109, 111-112; 168 NW2d 220 (1969); J A Utley Co v Saginaw Circuit Judge, 372 Mich 367, 375; 126 NW2d 696 (1964).
Plaintiff contends that the new court rule governing discovery of documents and things, MCR 2.310, has eliminated the good cause requirement. Plaintiff concludes that it need not demonstrate good cause for the production of the requested documents.
The staff note to MCR 2.310 states that it is based on rule 34 of the Federal Rules of Civil Procedure. As originally adopted in 1938, FR Civ P 34 required a showing of good cause by the moving party for the production of documents and things. The federal requirement of good cause subsequently became considered as an undesirable limitation for three reasons: (1) no one knew what it meant; (2) it led to confusion between trial preparation materials and other classes of documents and things; and (3) except for trial preparation materials it had little effect in actual practice. See 8 Wright & Miller, Federal Practice & Procedure, § 2205, p 594.
The federal rule was amended in 1970 eliminating the good cause requirement. Under the present rule, any document or thing which is not privileged and which is relevant to the subject matter involved in the pending action is freely discoverable upon request. FR Civ P 26(b), 34. Rule 26(b) protects privileged documents, documents assembled in preparation for litigation, and documents relating to a party’s expert witnesses with a stricter standard for discoverability.
Under the Michigan rules, as under the federal rules, protection is provided to the parties from whom production is sought by the more specific provisions of MCR 2.302(B) relating to materials assembled in preparation for trial and to experts retained or consulted by the parties. Many Michigan cases in which a showing of good cause was required for production involved documents prepared in preparation for litigation. See e.g., J A Utley Co, supra; Peters v Gaggos, 72 Mich App 138; 249 NW2d 327 (1976); Powers v City of Troy, 28 Mich App 24; 184 NW2d 340 (1970); Jones v New York R Co, 8 Mich App 575; 155 NW2d 216 (1967). Such documents are now protected by MCR 2.302(B). Hence the good cause requirement is no longer necessary for the production of these types of documents.
With respect to nonprivileged documents and things, and documents not assembled in preparation for trial, the Advisory Committee on the 1970 amendment to FR Civ P 26 aptly noted, "[ajpart from trial preparation, the fact that the materials sought are documentary does not in and of itself require a special showing beyond relevance and absence of privilege.” Advisory Committee Note to the 1970 amendment of Rule 26(b)(3), 48 FRD 500. Without more, discovery should not be less available where relevant, nonprivileged information is contained in a document than when such information is lodged in the memory of a witness. Crowe v Chesapeake & O R Co, 29 FRD 148, 150 (ED Mich, 1961). These findings are no less applicable to nonprivileged documentary materials sought to be discovered in Michigan.
Finally, as noted above, MCR 2.310 is based on FR Civ P 34. The rule adopts the federal formula tion of requiring a party to serve a request for production of documents or things before seeking a court order, as was required by GCR 1963, 310.1. See Staff Notes, MCR 2.310. Discovery practice in federal courts goes forward on notice or demand without judicial intervention unless the party from whom production is demanded seeks a protective or restrictive order. The staff note indicates that reduction of judicial intervention was the purpose of the change in discovery of documents and things. An interpretation of the new rule as requiring a demonstration of good cause for the production of documents and things would render the change meaningless as courts will continue to be burdened with contests over whether good cause has been demonstrated. Consequently, we conclude that the Supreme Court, in promulgating MCR 2.310, intended to follow the federal courts and abandon the good cause requirement.
We now turn to consideration of the discoverability of the documents in question. Plaintiffs originally sought production of eighteen categories of documents. Defendants agreed to produce hospital rules and regulations in effect during August and September, 1981, relating to various aspects of the administration of a gi examination. Defendants objected to the remainder of the requests on the basis of relevancy, materiality and privilege. Plaintiffs then filed a renewed motion to compel the production of documents or, in the alternative, for an in camera inspection of the documents to which defendants objected.
Documents and things which are not privileged and which are relevant to the subject matter involved in the pending action are freely discoverable upon request. MCR 2.301(B); MCR 2.310(A). The party submitting the request may move for an order compelling discovery with respect to an objection to or a failure to respond to a request for production. MCR 2.310(B); MCR 2.313(A). A trial court has considerable discretion in granting or denying a motion to produce. Peters, supra, p 149.
First, we consider defendants’ claim of privilege. Defendants object to the production of a number of the documents because those documents are subject to a statutory privilege. Because of the procedural posture of this case, it is impossible for us to determine what privilege, if any, may attach to these documents. This issue must first be resolved by the trial court after holding an in camera evidentiary hearing. See Monty v Warren Hospital Corp, 422 Mich 138; 366 NW2d 198 (1985). The trial court erred in denying plaintiffs’ request for such a hearing.
Next, we consider the issue of relevancy. To be discoverable, documents must be relevant. MCR 2.302(B). The allegations in plaintiffs’ complaint are directed to the care and treatment rendered patients, whether they are inpatients or outpatients, who are treated at the hospital. Hence those requests for documents relating to rules, regulations and guidelines on the selection of hospital medical staff, the nature and quality of patient care rendered, the operation of the department of radiology, the method of review of the department of radiology staff, and procedure followed by any entity assuring quality care is rendered in the department of radiology are all relevant with regard to the quality of care rendered by the hospital.
Similarly, documents relating to the hiring, training, supervision and review of radiology technicians, and documents relating to the maintence of the apparatus used in the administration of the examination performed on plaintiffs’ decedent are relevant on the issue of the quality of care rendered by the hospital and its staff.
Documents listing the pattern of staff organization or management, and listing the people associated with the department of radiology are relevant as they will lead to evidence concerning all personnel who rendered treatment to plaintiff.
The bylaws of the hospital are, for the most part, irrelevant on the issue of the quality of care rendered plaintiffs’ decedent in defendant hospital. However, the bylaws are relevant insofar as they set forth the purpose of the review of members of the hospital staff. If the bylaws provide that the purpose of the review function is to mete out discipline to physicians providing inadequate health care, then that part of the review conducted by the reviewing entity is not protected by the statutory privilege found in § 21215. Hence the bylaws are relevant and discoverable as they are reasonably calculated to lead to the discovery of documents requested by plaintiffs.
Contracts, leases or agreements between the hospital and O’Brien, or the hospital and another individual or entity providing radiology services are relevant for providing information concerning the responsibility for purchasing and maintenance of x-ray equipment and the staffing of the department of radiology.
Written rules and regulations concerning the chain of command for reporting incidents or medically imprudent care are irrelevant for the purpose of determining the quality of care rendered in the hospital. In any event, this information could be found in the bylaws and the written rules and regulations of the hospital.
Policies of insurance covering the hospital, the board of directors, O’Brien and the department of radiology are discoverable under MCR 2.302(B)(2).
The names of the members of the board of trustees are irrelevant on the issue of the quality of care rendered in the hospital. Thus, they are not discoverable.
Finally, defendants have agreed to provide plaintiffs with the complete medical record of the care of decedent. The medical record index is relevant to determining if the complete record was produced and, therefore, is discoverable.
To summarize, documents related to the chain of command and the names of the hospital’s board of directors are irrelevant and the trial court’s order is affirmed with respect to these documents. In all other respects, the order of the trial court is reversed. As for those documents which defendants claimed are privileged, the trial court shall conduct an in camera hearing to examine the documents and determine the existence, if any, of a privilege. The trial court shall order the production of those documents it determines to be relevant and nonprivileged. With respect to all other documents, the trial court shall enter an order compelling their production.
Reversed in part and remanded for further proceedings consistent with this opinion. Jurisdiction is not retained. Costs to plaintiffs.
Although only the personal representative takes an appeal, all plaintiffs brought the discovery request and subsequent motions.
Among the documents still sought by plaintiffs were
(1) The complete medical record of decedent,
(2) All contracts, agreements, leases or other documents concerning the relationship between O’Brien and Bi-County Hospital and O’Brien and any group performing radiologic services at the hospital,
(3) The hospital medical record index or other index evidencing the medical record system,
(4) By-laws of the hospital in effect in August and September, 1981,
(5) Hospital rules, regulations and guidelines,
(6) Hospital directives relating to the selection of the medical staff and granting of medical staff privileges, the nature and quality of patient care rendered at the hospital, the administration and operation of the department of radiology, the proper performance of gi examinations, the review of staff physicians, and the review of the radiologic care provided,
(7) Any documents relating to reports made to the state licensing or health department with regard to disciplinary action taken against any staff member relevant to the care of decedent,
(8) Documents relating to O’Brien’s admission to the hospital medical staff, and review of O’Brien’s qualifications,
(9) Documents relating to peer review and incident reports,
(10) Information with regard to the chain of command followed by personnel in reporting incidents of medically imprudent care,
(11) Names of hospital trustees in 1981,
(12) Documents evidencing the pattern of staff organization or internal management,
(13) Insurance information,
(14) Contracts, leases or agreements in existence in August and September, 1981, between the hospital and any other party providing radiology services or ancillary radiology services,
(15) Any documents relating to the approval, admission, credentials and review of any party providing radiology or ancillary radiology services,
(16) Documents relating to the hiring, training, supervising, and reviewing of the radiology department technicians,
(17) Documents or material routinely handed or provided to patients admitted,
(18) Documents relating to the names of all persons associated with the radiology department, and
(19) Accreditation information.
See discussion of this issue, infra.
See MCL 333.21513; MSA 14.15(21513), MCL 333.21515; MSA 14.15(21515), and MCL 333.20175; MSA 14.15(20175).
We do note that, with two exceptions, defendants’ claim of privilege, at first blush, appears strong. However, we are skeptical that privilege applies to the hospital’s rules and regulations or to documents related to the hospital’s accreditation.
MCL 333.21215; MSA 14.15(21215).
More specifically, the items in paragraphs 8 and 9 of plaintiffs’ February 7, 1984, document request. | [
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M. J. Kelly, P. J.
Plaintiff appeals by leave granted from a decision of the Workers’ Compensation Appeal Board denying her compensation for injuries sustained in the course of her employment as a day-care aide. We reverse.
In 1977, plaintiff was certified by the Department of Social Services as a day-care aide, allow ing her to provide in-home care for the children of DSS clients at the state’s expense. Plaintiff was eventually hired by June Radomski, an ADC recipient with two school-aged children. Radomski had enrolled in a work training program which qualified her for child care assistance from DSS, on the condition that the caretaker was certified or that the facility was licensed. Radomski was provided with a list of names of certified aides which included plaintiff. DSS paid plaintiff for her services by way of a check made payable to both plaintiff and Radomski.
Plaintiff, a 16-year-old high-school student, began taking care of Radomski’s children after school each weekday from 3:30 p.m. until approximately 5:30 p.m. On June 3, 1977, plaintiff was to begin full-time employment through the summer months. On that day, however, as plaintiff was transporting the children to Radomski’s place of employment, she was involved in an automobile accident and sustained serious injuries.
Plaintiff’s father filed a claim with the Bureau of Workers’ Disability Compensation against DSS on plaintiff’s behalf, alleging that plaintiff had lost the industrial use of her left arm, leg, and hip and had sustained mental injuries as a result of the accident. Following a hearing, the hearing referee found that plaintiff was an employee of DSS and that she had sustained permanent and total loss of use of her left leg and arm. Plaintiff was awarded maximum weekly benefits of $127 under MCL 418.359; MSA 17.237(359). Defendants appealed the decision to the WCAB and commenced paying 70% of the weekly benefits as required under MCL 418.862; MSA 17.237(862). The WCAB subsequently reversed and held that compensation was not authorized under the Worker’s Disability Com pensation Act of 1969, MCL 418.101 et seq.; MSA 17.237(101) et seq., because plaintiff was an independent contractor hired by Radomski and not an employee of DSS. MCL 418.161; MSA 17.237(161). The board further refused to hold DSS liable as a statutory principal under MCL 418.171; MSA 17.237(171).
I
The hearing referee issued his award on October 30, 1980. From that date until January or February of 1982, defendants paid 70% of plaintiff’s compensation benefits pending appeal, as is required under MCL 418.862; MSA 17.237(862). Following the decision of the Michigan Supreme Court in Gusler v Fairview Tubular Products, 412 Mich 270; 315 NW2d 388 (1981), reh granted but appeal dismissed 414 Mich 1102 (1982), defendants contacted the chairperson of the WCAB and inquired about reducing plaintiff’s monthly payments according to the rule announced in that case. Despite the apparent inapplicability of Gusler to this case, defendants’ request was favorably received and payments to plaintiff were reduced after the WCAB chairperson advised the State Accident Fund that it would be appropriate to do so.
Plaintiff subsequently moved to dismiss defendant’s appeal for failure to comply with the 70% rule. The WCAB denied plaintiff’s motion, claiming that an order of dismissal under MCL 418.862; MSA 17.237(862) was discretionary with the board and that:
"Because of the complexity and serious issues raised in this case, as well as the ambiguous nature of the administrative law judge’s decision regarding Section 359, and the controversies created by Gusler, it is not appropriate to dismiss defendants’ appeals. This situation was also contributed to by the board when it, perhaps incorrectly, advised the State Accident Fund that it would be permissible to reduce the amount of plaintiff’s benefit.”
Plaintiff argues on appeal that dismissal was mandatory under McAvoy v H B Sherman Co, 401 Mich 419; 258 NW2d 414 (1977), reh den 402 Mich 953 (1977), and that the WCAB had no discretion to deny plaintiff’s motion. We disagree.
This Court has held that the WCAB is not required to dismiss an appeal under MCL 418.862; MSA 17.237(862) where there is substantial compliance with the 70% rule and good cause can be shown for partial noncompliance. Dean v Great Lakes Casting Co, 78 Mich App 664, 666, 669; 261 NW2d 34 (1977). Dismissal is not required, for example, where payment was initially made but then inadvertently terminated. Perry v Sturdevant Manufacturing Co, 124 Mich App 11; 333 NW2d 366 (1983). In this case, defendants substantially complied with the 70% rule by paying plaintiff’s benefits from October 30, 1980, until January or February of 1982. Reduced payments were made until May 17, 1982, when the WCAB issued its final opinion on defendants’ appeal. While we believe that the chairperson of the WCAB exceeded his authority in informally and summarily consenting to a reduction in plaintiff’s benefits, we cannot say that the defendants acted without good cause in relying upon that consent. Given the defendants’ substantial compliance with the rule, the chairperson’s approval of reduction and the concerns stated in its order denying plaintiff’s motion to dismiss, we cannot say that the board abused its limited discretion under MCL 418.862; MSA 17.237(862). We now turn to the merits of plaintiffs appeal.
II
Plaintiff contends that the board erred in concluding that plaintiff was not a DSS employee. We find no error.
Our review of decisions of the WCAB is limited. Findings of fact in workers’ compensation proceedings are conclusive in the absence of fraud, Const 1963, art 6, § 28; MCL 418.861; MSA 17.237(861), and we will review the record only to determine whether there is any evidence to support the board’s decision. Kostamo v Marquette Iron Mining Co, 405 Mich 105, 135-136; 274 NW2d 411 (1979); Gibbs v General Motors Corp, 114 Mich App 1, 3; 318 NW2d 565 (1982), remanded on other grounds 417 Mich 1048 (1983). We may, however, reverse the WCAB’s decision where it is based on erroneous legal reasoning. Aquilina v General Motors Corp, 403 Mich 206, 213; 267 NW2d 923 (1978).
In considering whether plaintiff was an employee of DSS the board made the following findings:
"The facts, as developed so far, establish that the state sponsored or participated in certain social welfare programs which provided that it would pay 'qualified’ babysitters hired by persons eligible for the service. It is clear from the testimony of defendant’s witnesses, and the exhibits introduced by plaintiff that a person eligible for the child care service (Mrs. Radomski) 'hires’ the person who provides the service (plaintiff). Given plaintiff’s admitted confusion, the testimony of the DSS employees, and especially that of Mrs. Radomski, it is concluded that Mrs. Radomski contacted plaintiff after having been given her name along with others. On the same basis, it is concluded that Mrs. Radomski selected plaintiff and that she and plaintiff established plaintiff’s hours and duties and that defendant did not supervise plaintiff.
"As between defendant and plaintiff, the bargain was that the state would review plaintiff’s qualifications and, if qualified, certify her. If certified, the state would place her name on a list and would pay her if she was selected to sit by an eligible person. Until plaintiff was selected, the state had no obligation to plaintiff except, possibly, to give out her name when her kind of service was requested. If plaintiff was selected, the state had no obligation to pay unless she was selected by a person meeting certain criteria set by the government. Until selected, the only thing offered by plaintiff was presumably to be available and, if selected, to render adequate child care. The state derived no benefit from plaintiff being available. Only when plaintiff sat for an eligible person and thereby assisted in getting that person back into the work force did the state derive a benefit from plaintiff.”
Based on these facts, the board then considered the factors enunciated in McKissic v Bodine, 42 Mich App 203, 208-209; 201 NW2d 333 (1972), lv den 388 Mich 780 (1972), to determine whether plaintiff was an employee or an independent contractor. See also Askew v Macomber, 398 Mich 212, 217-218; 247 NW2d 288 (1976).
A careful review of the record reveals that the board applied the proper legal standard to findings of fact supported by competent evidence. We cannot say that the board erred in finding, as a matter of law, that the relationship between DSS and plaintiff was more akin to that of employer-contractor than employer-employee. DSS exerted no control over plaintiff’s duties nor did DSS have the right to hire or fire plaintiff. While DSS was responsible for plaintiff’s compensation, it is also clear that DSS intended payment to be made to plaintiff through Radomski since the draft was made payable to both. Materials or equipment were supplied by plaintiff or Radomski and not by DSS. Plaintiff held herself out to the public as a babysitter, a job customarily performed in the capacity of a contractor, and plaintiff could and did perform the same service for others. We agree with the board’s conclusion that "defendant took permissible advantage of the act and structured its relationship with plaintiff to avoid liability to her under the Worker’s Disability Compensation Act”.
Ill
Plaintiff alternatively argues that DSS is liable as a statutory principal. MCL 418.171; MSA 17.237(171) provides in relevant part:
"If any employer subject to the provisions of this act, in this section referred to as the principal, contracts with any other person,, in this section referred to as the contractor, who is not subject to this act or who has not complied with the provisions of section 611, and who does not become subject to this act or comply with the provisions of section 611 prior to the date of the injury or death for which claim is made for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation under this act which he would have been liable to pay if that workman had been immediately employed by him.”
Under this statute, the liability of DSS as a statutory principal must be premised on four specific elements: (1) DSS must be subject to the provisions of the Worker’s Disability Compensation Act of 1969, (2) Radomski must not be subject to the act or must not have secured workers’ compensation coverage, (3) there must be a contract between DSS and Radomski regarding plaintiffs services, and (4) plaintiffs injuries must have occurred while performing work under the contract between DSS and Radomski. Davidson v Wayne County Bd of Road Comm’rs, 86 Mich App 592, 597-598; 272 NW2d 740 (1978).
There is no dispute that DSS is subject to the provisions of the Worker’s Disability Compensation Act and that Radomski is not. Nor is there any dispute that plaintiffs injuries were incurred while performing child care services for Radomski. We agree with the board’s conclusion that the pivotal issue in determining whether DSS is liable as a statutory principal is whether there was a contract between DSS and Radomski regarding plaintiffs employment. The board found that any agreement entered into between DSS and Radomski could not be characterized as a contract because there was no consideration flowing between the parties. The hoard reasoned that Radomski was required to work under MCL 400.55a; MSA 16.455(1) (prior to the 1980 amendment) and the state thus received no legal benefit from Radomski’s enrollment in the work training program. MCL 400.55a; MSA 16.455(1) is simply not applicable to the situation presented here. Both the preamended and amended versions of MCL 400.55a; MSA 16.455(1) apply to recipients of general public relief, more commonly referred to as "general assistance”, and do not apply to recipients of ADC. Eligibility requirements for recipients of ADC are instead governed by MCL 400.56; MSA 16.456 and MCL 400.56g; MSA 16.456(7) and Radomski’s duty, if any, to sign up for a work training program is a matter of federal law. MCL 400.56f; MSA 16.456(6). No evidence was introduced below to establish that Radomski was required to work under federal law. In fact, an employee of DSS testified at the hearing and the referee found on the record that Radomski did not obtain her job under the WIN program but voluntarily accepted employment under some other program after having been referred for an interview because of her known desire to obtain work. The board relied on erroneous legal reasoning in concluding that any contractual agreement between DSS and Radomski must fail for lack of consideration. We decline to remand for further findings or arguments on Radomski’s duty to work inasmuch as the state, after having had ample notice and opportunity, has simply failed to come forth with any evidence or legal authority indicating the need for such a remand.
We conclude that the bargain struck between DSS and Radomski does constitute a contract within the meaning of MCL 418.171; MSA 17.237(171). DSS agreed to pay Radomski’s child care expenses in return for her participation in a work training program. As far as can be ascertained from the record, Radomski was under no legal obligation to work and did so on a purely voluntary basis. The consideration flowing to DSS as a result of this agreement is the increased likelihood that Radomski, by developing work skills, training and experience might eventually succeed in becoming self-sufficient. Because plaintiffs injuries occurred in the performance of work bargained for between DSS and Radomski, we find that DSS is liable to plaintiff for workers’ compensation benefits under MCL 418.171(1); MSA 17.237(171X1).
The board did determine that as a result of the accident plaintiff lost the industrial use of her left leg and arm and that her rate of compensation, if any, should be determined under MCL 418.359; MSA 17.237(359). We remand for entry of an order of compensation consistent with these findings. Such order shall include the granting of benefits for the appropriate nursing and custodial care required from September 21, 1977, in accordance with the applicable provisions of the act.
Reversed and remanded.
J. C. Kingsley, J., concurred. | [
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Hood, J.
Berkel & Company Contractors appeals as of right from a judgment in the Washtenaw Circuit Court that held that Berkel, a subcontractor, was not entitled to payment for construction work until the general contractor was paid for that work by the owner. We affirm.
In October 1989, Christman Company entered into a contract with Anthony S. Brown Development Company, Inc., (asb) and Anthony S. Brown (Brown) to act as the construction manager on a certain project. Eventually, Christman sued asb and Brown, seeking payment for work performed. At the time that construction began, asb and Brown assured Christman that financing would be forthcoming, or that they would be personally liable for the cost of the construction. Financing was never obtained, and Christman’s suit therefore claimed intentional or negligent misrepresentation, deceit, breach of contract, and breach of a third-party beneficiary contract (against asb) and sought foreclosure of construction liens (against asb) and guarantee of payment (against Brown).
The claim seeking foreclosure of the construction liens was made on behalf of both Christman and the numerous subcontractors, including Berkel, which was a subcontractor in the second phase of the construction project. The litigation against Brown and asb was settled, and a consent judgment was entered against them. As part of the settlement, all subcontractors, with the exception of Berkel, agreed to accept a pro-rata portion of the installment payments made by asb and Brown over time, whenever Christman received such payments.
Berkel filed a cross-claim against Christman and a claim against asb and Brown, seeking money due for work performed on the project. It specifically sought a money judgment against Christman under its subcontract with Christman, seeking immediate payment. Berkel had never before been involved in a project in which the financing had not been in place by the time that the subcontract was signed and relied, inter alia, on provisions in its final letter defining the scope of its work that provided that it would be paid within thirty days after the completion of its work. The trial court found that the contract between Christman and Berkel clearly provided that payments to Berkel would not be made until Christman was paid for the work by the owner.
Berkel first claims that the payment provisions of its contract with Christman are ambiguous and, therefore, must be construed against Christman. We disagree. The trial court correctly found that there was no ambiguity. The contract clearly provides that all payments to the subcontractor are to be made only from equivalent payments received by Christman for the work done, "the receipt of such payments by the Christman Company being a condition precedent to payments to the subcontractor.” The following section of the contract, dealing with final payment, also clearly conditions payment to Berkel upon the payment by the owners to Christman.
Berkel’s reliance on the provision in its bid proposal requiring payment within thirty days is unavailing. A reference by contracting parties to an extraneous writing for a particular purpose makes it a part of their agreement only for the purpose so specified. Arrow Sheet Metal Works, Inc v Bryant & Detwiler Co, 338 Mich 68, 78; 61 NW2d 125 (1953). Here, the contract incorporated only that portion of Berkel’s bid proposal that dealt with auger cast piling and slope stabilization; it did not incorporate all the conditions of the proposal. Of even more importance, the provision of the proposal providing for payment within thirty days does not specify payment by Christ-man. Therefore, even if the provisions were considered as incorporated, there is no ambiguity, and payment to Christman by the owners would still be a condition precedent to payment by Christman to Berkel.
Berkel next argues that even if considered operative, a "pay when paid” clause is merely a provision that postpones payment for a reasonable amount of time, not indefinitely. Again, we disagree. As indicated earlier, the trial court quite properly found that Christman was not required to pay Berkel until it received payment from the owner. Failure to satisfy a condition precedent prevents a cause of action for failure of performance. Lee v Auto-Owners Ins Co, 201 Mich 39, 43; 505 NW2d 866 (1993). The contract contains no language limiting the condition precedent to any "reasonable time.” Christman fulfilled any condition that required it to take active measures to collect the money due, as evidenced by its action against the owners. We are not persuaded by Berkel’s authority from other jurisdictions and find no clear error in the trial court’s determinations. People v Vaughn, 186 Mich App 376, 380; 465 NW2d 365 (1990).
Berkel also argues that Christman’s act of issuing the subcontract without notifying Berkel that financing was not in place renders the "pay when paid” proviso unenforceable. We find it unnecessary to address the issue whether the failure of a contractor to inform a subcontractor about a lack of financing before the signing of the contract with the subcontractor results in a breach of the contract. In this case, the trial court found that Berkel had notice of the lack of financing before signing the contract. This finding by the trial court was not clearly erroneous. See People v Vaughn, supra. Because Berkel had knowledge of the lack of financing, it has no cause of action for breach of contract with respect to this issue.
Finally, Berkel maintains that the amount Christman claimed was owing to Berkel, $59,000, was incorrect, and that the correct amount due was $65,799. Because we have held that the "pay when paid” provision precludes payment to Berkel until the owner pays Christman, we need not address this issue, Moreover, the trial court did not address the amount due and owing to Berkel, and, thus, our review of the issue is precluded. Allen v Keating, 205 Mich App 560, 564; 517 NW2d 830 (1994).
Affirmed. | [
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Per Curiam.
Defendant was charged with two counts of unlawfully driving away a motor vehicle, MCL 750.413; MSA 28.645, and two counts of receiving and concealing stolen property, MCL 750.535; MSA 28.803. The trial court granted defendant’s motion to suppress evidence seized after a search made pursuant to a search warrant and the people take this appeal by leave granted.
The trial court summarized the facts as follows:
"On January 6, 1983, William P. Mitchell, a magistrate with the 75th District Court, issued a search warrant upon the residence and curtilage of defendant’s parents, Richard and Eleanor Payne, located at 1766 East Gordonville Road in the County of Midland. The search resulted in the confiscation of the following items: 1) a Sears & Roebuck AM-FM CB radio; 2) an AM-FM AMC radio; 3) a piece of weathered wood; and, 4) four tires and wheels. Said evidence is a vital part of the prosecution’s case as to all four pending counts.
"William P. Mitchell has been deputy court administrator and court officer for the 75th District Court of Midland County since approximately January 1, 1969. In November of 1979 he assumed the additional responsibilities of magistrate.
"Since January, 1969, William P. Mitchell has been a duly sworn member of the Midland County Sheriffs Department, having full police powers. He retains that status, as court officer, to occasionally transport prisoners and be capable of keeping order in the courtroom including his power to arrest.
"Mr. Mitchell has also periodically attended monthly meetings of the Midland County Reserve Deputies in order to receive training. Since becoming magistrate he has not participated in any criminal investigation nor worked road patrol.
"Mr. Mitchell did not know the defendant nor any member of defendant’s family where the search warrant was executed and accordingly, no claim of personal bias has been argued.
"Furthermore, there is no contest regarding probable cause for the search warrant to issue nor the magistrate’s ability to determine probable cause.”
Based on the above, the trial court granted defendant’s motion to suppress the seized evidence and held that a district court magistrate is not sufficiently neutral and detached for the purpose of issuing search warrants where he is also a court officer deputized with full police powers.
We hold that the trial court erred by granting defendant’s motion to suppress. Under the facts of the instant case, the magistrate’s affiliation with the sheriffs department, without more, is insufficient to support the finding by the trial court that the magistrate was not sufficiently neutral and detached.
In Coolidge v New Hampshire, 403 US 443, 449; 91 S Ct 2022; 29 L Ed 2d 564 (1971), the United States Supreme Court wrote:
"The classic statement of the policy underlying the warrant requirement of the Fourth Amendment is that of Mr. Justice Jackson, writing for the Court in Johnson v United States, 333 US 10, 13-14 [68 S Ct 367, 369; 92 L Ed 436, 440 (1948)]:
" 'The point of the Fourth Amendment, which often is not grasped by zealous officers, is not that it denies law enforcement the support of the usual inferences which reasonable men draw from evidence. Its protection consists in requiring that those inferences be drawn by a neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime. Any assumption that evidence sufficient to support a magistrate’s disinterested determination to issue a search warrant will justify the officers in making a search without a warrant would reduce the Amendment to a nullity and leave the people’s homes secure only in the discretion of police officers. * * * When the right of privacy must reasonably yield to the right of search is, as a rule, to be decided by a judicial officer, not by a policeman or government enforcement agent.’ ”
In Shadwick v City of Tampa, 407 US 345, 350; 92 S Ct 2119, 2123; 32 L Ed 2d 783, 788 (1972), the United States Supreme Court established a two-part test to determine who may qualify as a magistrate and thus have the power to issue search and arrest warrants. First, the magistrate must be neutral and detached and, second, the magistrate must be capable of determining whether or not probable cause exists for the proposed search or arrest. We address only the first part of the test.
In the instant case, there was no showing that the magistrate was engaged in the "enterprise of ferreting out crime” and thus could not be neutral and detached. On the contrary, the trial court specifically found that the magistrate "has not participated in any criminal investigation nor worked road patrol” since becoming magistrate.
This was not a situation where, as in Coolidge, supra, the issuing magistrate was also the prose cuting attorney who had taken personal control of the criminal investigation. Neither is this a situation, as in People v Lowenstein, 118 Mich App 475; 325 NW2d 462 (1982), where the magistrate had previously prosecuted defendant and been sued by defendant.
We hold that a mere affiliation, without more, between a magistrate and a law enforcement group is insufficient to support a finding that the magistrate is not neutral and detached. Where, as here, an affiliation exists but there is no active pursuit by the magistrate of a law enforcement career, the magistrate is sufficiently neutral and detached for the purpose of issuing warrants.
Reversed.
We note that, under Const 1963, art 6, § 29, each judge of this panel is a conservator of the peace within this state and can arrest for misdemeanors committed in his presence. City of Lincoln Park v Sigler, 28 Mich App 410; 184 NW2d 524 (1970). | [
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R. B. Burns, J.
Defendant was convicted by a jury of negligent homicide. MCL 750.324; MSA 28.556. He appeals and we affirm.
The charge in the present case arose out of an automobile accident occurring on November 14, 1981, at approximately 8:30 p.m. The defendant, while driving eastbound on the departure ramp of the Veteran’s Bridge in Bay City, struck and killed a bicyclist. Open containers of intoxicants were found in his vehicle.
Three witnesses testified that shortly before the accident they observed the defendant’s vehicle traveling over the bridge. Patricia Fisher stated that the defendant’s automobile swerved around her vehicle and continued over the bridge at a speed of between 45 and 50 miles per hour. She believed the defendant’s vehicle was "fishtailing” as it drove away from her. Angela Bristow testified that she and a friend, Barbara Weir, were walking over the bridge when the defendant sped past them. She estimated that defendant was driving at a speed of 50 miles per hour or more when he passed them. Ms. Weir testified that defendant was traveling in excess of the speed limit and that she shouted at him to slow down. Ms. Bristow and Ms. Weir also saw the victim riding his bicycle on the bridge’s sidewalk before the defendant passed them. Bay City Police Officer Edward LaPlant who testified as an expert on accident reconstruction, determined that defendant’s vehicle was traveling between 49 and 54 miles per hour when the vehicle began to skid before hitting the victim.
Approximately three hours after the accident, defendant was taken to a hospital where blood was taken from him. The alcohol content of his blood was found to be .29. A toxicologist testified that a blood alcohol level of .29 represented a very high alcohol intake and that an individual with such a high concentration of alcohol in his bloodstream would have a decreased ability to see at night, to judge driving speed and distance, and to steer an automobile. Furthermore, such person’s reaction time would be lengthened and he would show obvious signs of intoxication. One police officer who observed defendant after his arrest testified that defendant’s speech was slurred and that defendant had difficulty handling a telephone in the police station. Another policeman who saw defendant at a bar before the accident testified that at that time the defendant was intoxicated. He admitted, however, that defendant did not stagger or stumble while in the bar. Likewise, a police officer who observed defendant at the accident scene stated that, although defendant’s breath smelled of alcohol, he walked fairly well and his clothes were not in disarray.
The prosecution argued that the defendant negligently caused the victim’s death by either operat ing his motor vehicle at an excessive speed or by operating it while intoxicated. Defendant argued, inter alia, that the victim’s negligent operation of his bicycle may have caused the accident. Defendant theorized that the victim may have abruptly left the sidewalk and crossed in front of the defendant and that defendant was unable to avoid hitting him. In support of this theory, defense counsel argued that the victim may have been under the influence of marijuana when the accident occurred. A small quantity of marijuana was found on the victim’s body and defendant offered the testimony of Jesse Glasspell, who saw the victim smoking marijuana in Veteran’s Memorial Park on the evening of the accident. In a separate record, Glasspell testified that from 6 p.m. to 7 p.m. that evening he observed the victim sharing as many as three marijuana "joints” with three or more other people. The victim then left the park in an automobile and returned between 8 p.m. and 8:30 p.m. The victim then shared two or three more joints.
The toxicologist also testified for defendant on a separate record. He stated that ingestion of a sufficient amount of the active ingredient in marijuana causes an intoxication which lengthens reaction time and decreases judgment. He could not give an opinion as to whether the alleged marijuana use affected the victim’s operation of the bicycle, however, because he did not know the strength of marijuana ingested. He stated that it would be helpful to know if the victim exhibited any symptoms of intoxication before the accident. Defense counsel offered to show that the victim rode the bicycle over the bridge rather than walking with it as directed by a sign and that the victim had, at some point prior to the accident, left the sidewalk and begun riding in the street. The toxicologist stated that this information was not helpful in determining whether the victim’s alleged marijuana use affected his ability to operate the bicycle with due care.
The trial judge ruled that, without some testimony indicating that the marijuana use affected the defendant’s ability to ride the bicycle, there was no connection between the marijuana use and defendant’s theory. The judge also noted that there was no testimony as to the strength of the marijuana and, therefore, nothing to indicate the effect the marijuana would have had on the victim. For these reasons, the trial judge ruled that, at that point in the trial, the evidence concerning the victim’s marijuana use was irrelevant and inadmissible. Defendant now challenges this ruling on appeal.
Relevant evidence is evidence having any tendency to make the existence of any fact of consequence to the determination of the action more probable or less probable than it would be without the evidence. MRE 401. All relevant evidence is admissible except as otherwise provided by constitution or rules of evidence. MRE 402. People v Prast (On Rehearing), 114 Mich App 469; 319 NW2d 627 (1982). MRE 403 excludes relevant evidence if its probative value is substantially outweighed by the risks of unfair prejudice, confusion of issues, waste of time, or misleading the jury.
The burden of controlling the introduction of evidence falls upon the trial judge, who must draw upon his own wisdom and experience in making a decision as to relevancy. People v Howard, 391 Mich 597, 603-605; 218 NW2d 20 (1974). It is not within the role of this Court to second-guess such judgment. People v Howard, supra, p 603; People v Potter, 115 Mich App 125, 134; 320 NW2d 313 (1982).
In a prosecution for negligent homicide, the deceased’s contributory negligence is not a defense and, therefore, does not negate the defendant’s negligence if the latter is established. People v Jeglum, 41 Mich App 247, 249-250; 199 NW2d 854 (1972). However, any contributory negligence should be considered by the jury so that it may properly assess whether the defendant’s negligence was the proximate cause of the victim’s death. See People v Jeglum, supra, pp 250-251.
Defendant argues that the proffered testimony regarding the victim’s alleged marijuana use was relevant to the victim’s ability and capacity to react and, consequently, relevant to whether the victim exercised ordinary care for his own safety. We agree that, in cases such as the present one, a victim’s negligent operation of a bicycle is relevant to causation and that a victim’s marijuana use prior to the accident would ordinarily be relevant to whether the victim was able to operate the bicycle with due care. However, in the instant case, as the trial judge noted, there was no testimony indicating the strength of the marijuana allegedly ingested by the victim. Nor was there any testimony as to the amount of the active ingredient of marijuana in the victim’s bloodstream or testimony indicating that the victim showed signs of intoxication. Without these pieces of information, the jury would have been, as was the toxicologist, unable to make an accurate assessment of whether the victim was intoxicated from marijuana use and whether his ability to operate the bicycle was impaired. Thus, the proffered testimony relating to marijuana use had little probative value on the question of whether the decedent operated his bicycle with due care.
Furthermore, the evidence which was admitted lent no support to defendant’s theory. Barbara Weir, who saw the victim on the bridge, testified that he was not having trouble balancing himself on the bicycle and was not "weaving” when he passed her. Similarly, Mr. Glasspell testified that the victim did not display difficulty balancing himself on the bicycle after he smoked the alleged marijuana.
Officer LaPlant testified that the defendant’s vehicle jumped the curb prior to striking the victim and that the bicycle was only seven inches off the curb in the street at the moment of impact. It should be noted that the victim clearly had a right to be in the street at the time of the accident. A bicyclist has a full right to use a roadway where no designated bicycle path is available provided that he rides as near to the right side of the roadway as practicable. MCL 257.660; MSA 9.2360. The victim’s proximity to the curb indicates that he was lawfully riding in the street at the time of the accident. In addition, there was no testimony indicating how the victim steered into the street. The defendant, the only eyewitness to the accident, refused to testify, although he stated to police after the accident that he never saw the victim.
Thus, there was no evidence admitted indicating that the decedent abruptly left the sidewalk and crossed in front of defendant’s vehicle as the defendant theorized. Nor was there any evidence indicating that the decedent had difficulty maneuvering his bicycle, which might allow an inference, however unjustified, that the decedent operated the bicycle without due care because he was under the influence of marijuana. To the contrary, it appears he was not riding his bicycle erratically after having smoked the alleged marijuana.
Absent evidence as to the strength of the alleged marijuana ingested and absent any evidence that the decedent operated the bicycle without due care or showed signs of intoxication, there was an exceedingly slight logical connection between the alleged marijuana use and the fact sought to be proved, i.e. that the decedent left the sidewalk and crossed in front of defendant. Moreover, there was a danger that if the proffered testimony were admitted the jury would be unduly distracted on the side issues of whether the deceased did smoke marijuana, the amount that he smoked, when he smoked it and, most importantly, the effect it would have had on his ability to operate a bicycle with due care. The slight probative value which the proffered testimony may have had was substantially outweighed by its dangers of unduly distracting the jury and wasting time. MRE 403. Under these circumstances, we cannot find that the trial judge’s decision to exclude the evidence was an abuse of discretion. Therefore, we reject defendant’s arguments on this point.
We also reject defendant’s claim that the trial judge erred in failing to instruct the jury that the decedent’s bicycle failed to comply with certain Bay City ordinances regulating bicycle equipment, registration, and inspection, and that such noncompliance was evidence of negligence. A violation of an ordinance intended to promote safety is evidence of negligence. See Johnson v Grand Trunk Western R Co, 58 Mich App 708, 713-714; 228 NW2d 795 (1975). To constitute such evidence, the ordinance must be designed to protect the class of persons in which a person harmed is included against the risk of the type of harm which has, in fact, occurred as a result of its violation. Webster v WXYZ, 59 Mich App 375, 383-384; 229 NW2d 460 (1975), lv den 395 Mich 751 (1975).
Clearly, the violations of the ordinances dealing with bicycle inspection and the horn did not, either directly or indirectly, result in the accident and, therefore, the trial court did not err in failing to instruct on these ordinances. In addition, defendant failed to show that the red reflector on the deceased’s bicycle was not in compliance with the ordinance. Accordingly, defendant was not entitled to an instruction regarding the reflector ordinance.
It was clear that the victim’s bicycle did not have a headlight in compliance with the ordinance. The trial court found, however, that the purpose of this ordinance was not to make the bicycle visible from the rear to prevent accidents like the one involving defendant, especially since the next part of the ordinance required rear reflectors. Based on this record, we cannot say this ruling was erroneous. Therefore, we cannot find that the failure to give the requested instruction was reversible error.
We have reviewed defendant’s other claims of error and conclude that they lack merit.
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M. J. Kelly, J.
Defendant appeals as of right from a plea-based conviction of gross indecency between males under the sexual delinquency provisions of MCL 750.338; MSA 28.570 and MCL 750.10a; MSA 28.200(1). He was sentenced to a term of from 5 to 7-1/2 years in prison. Defendant raises two issues on appeal, neither of which are meritorious.
Defendant first contends that his convictions are not supported by a sufficient factual basis as required under GCR 1963, 785.7(3). According to defendant’s testimony at the plea-taking proceeding in this case, the 15-year-old complainant "consented to” defendant’s sexual contact with him. Defendant relies upon People v Howell, 396 Mich 16; 238 NW2d 148 (1976), for the proposition that a conviction for gross indecency cannot be sustained where there is consent. In People v Howell, Justice Levin wrote that the gross indecency statutes "prohibit oral and manual sexual acts committed without consent or with a person under the age of consent”. 396 Mich 24. However, only two other justices concurred in this language. The remaining three justices who participated in the decision did not support this specific portion of Justice Levin’s opinion. Because there are less than four justices in People v Howell agreeing that lack of consent is an essential element of the crime of gross indecency, that interpretation is not binding on this Court under the doctrine of stare decisis. See Negri v Slotkin, 397 Mich 105, 109; 244 NW2d 98 (1976).
We follow the line of Michigan authority holding that convictions under the gross indecency statutes are proper even where the proscribed conduct occurs between two consenting adults. People v Masten, 96 Mich App 127, 132; 292 NW2d 171 (1980), rev’d on other grounds 414 Mich 16; 322 NW2d 547 (1982); People v Jones, 75 Mich App 261, 272, fn 5; 254 NW2d 863 (1977), lv den 402 Mich 822 (1977); People v Livermore, 9 Mich App 47; 155 NW2d 711 (1967). Thus, even if complainant in this case did consent to defendant’s sexual contact with him, we find that such consent does not render defendant’s plea-based conviction invalid for lack of a sufficient factual basis. In light of this rationale, we find no need to determine whether complainant was under, the age of consent.
Defendant secondly argues that the trial court considered evidence and facts outside the record in imposing its sentence upon defendant. We do not agree. The trial court’s conclusion that defendant operated within a normal range of intelligence is not unsupported by the record. The two psychological reports on which defendant relies concluded that defendant, though possibly borderline retarded, might also fall within the dull to normal range of intelligence. Moreover, the psychological reports and the presentence report referred to defendant’s ability to operate his own business and to achieve above average grades in adult education courses. The trial court’s finding that defendant was of normal intelligence is supported by the record. We further note that defendant’s sentence was not unusually severe in light of the fact that defendant could have been sentenced to life imprisonment under the alternate sentencing provision of MCL 750.338; MSA 28.570. It was undisputed below that defendant had been convicted of three separate counts of criminal sexual conduct prior to his conviction in the instant case. Given our examination of the record below, we cannot conclude that the sentence imposed upon defendant was so excessive as to shock our judicial conscience. People v Coles, 417 Mich 523, 550; 339 NW2d 440 (1983).
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Per Curiam.
Defendants Game Time, Inc., and Hartford Accident & Indemnity Company (defendants) appeal by leave granted the decision of the Workers’ Compensation Appeal Board (WCAB) which affirmed the reversal by the assistant deputy director of the Bureau of Workers’ Disability Compensation of the redemption agreement between defendants and plaintiff.
On May 28, 1981, plaintiff filed for a workers’ disability compensation hearing, claiming that he suffered from work-related injuries to his back, leg, nervous system, cardiopulmonary system, and cardiovascular system. In support of his claim, plaintiff deposed Dr. Lawrence Newman, who testified that plaintiff probably had "fume fever” probably caused by plaintiff’s exposure to welding fumes, accompanied by "residual emphysema”. Dr. Newman agreed that plaintiffs cigarette smoking could also have been a contributing factor to his condition. Defendants’ witness, Dr. Richard Bates, testified by deposition that plaintiff did not have emphysema, that at most plaintiff suffered from chronic bronchitis. Furthermore, Dr. Bates found the diagnosis of fume fever and emphysema or any lung disease to be totally unsupported.
On June 10, 1982, a hearing was conducted before a hearing referee at which plaintiff agreed to redeem defendants’ liability. Plaintiff testified at the hearing that he understood that he was settling all claims relating to his former employment with defendants Game Time, Inc., and T & S Equipment Company. Plaintiffs attorney asked him at the redemption hearing:
"[Plaintiff’s counsel]: In other words, we did make a claim relative to the stroke that you suffered, and we made a claim relative to your back problem, but if there is any other problem that were to arise later on, you would not be able to come back and say, 'I’ve obtained more information or I’m more disabled or I have a condition which I did not know about.’ And they’re trying to settle all of the claims at this time. Do you understand that?
"[Plaintiff]: Yes.
"[Plaintiff’s counsel]: You in addition had some lung problems, and, as I understand it, you were taken off your welding job as a result of the lung difficulties; is that correct?
"[Plaintiff]: Yes.
"[Plaintiff’s counsel]: That claim is also being settled in the process of this. Do you understand that?
"[Plaintiff]: Yeah.”
The redemption agreement was approved and an order entered by the hearing referee on June 10, 1982. On June 15, 1982, plaintiff requested a review of the agreement, stating:
"Here is a copy of my hearing. I would like another review or hearing. I have thought this through carefully and I don’t feel that $18,000 is a fair settlement for what I’ve been through and what I have to go through the rest of my life. With my injured back. And my breathing and lungs from welding at Game Time, Inc., and at T & S Equipment. So I want to appeal this case.”
Plaintiff’s request for a review was approved.
At the resultant hearing on July 20, 1982, plaintiff testified that, when he agreed to the redemption, he was unaware that Dr. Newman had diagnosed emphysema; that plaintiff did not know of that diagnosis until after the hearing when he read the doctor’s deposition testimony. He said he had asked his attorney about "what report Newman gave me, and he told me at the time he would send me a copy of it, but he never sent me a copy either”.
The assistant deputy director, who conducted the review hearing, reversed the redemption order. His reversal was affirmed by a majority of the WCAB on January 10, 1983, who wrote:
"We would affirm the assistant deputy director. In our opinion the plaintiffs reason for requesting reversal is substantially more than a change of heart. It matters not that we may equate lung problems or cardio-pulmonary problems with emphysema; it apparently means something dramatically different to the plaintiff herein. In any event, the assistant deputy director’s review allows the exercise of discretion and we feel that the decision is reasonable and supported by the facts. The hearing before the assistant deputy director clearly reveals that plaintiff was not aware of this specific diagnosis having been made until after the redemption hearing. While we, as factfinders, may not be impressed with the distinction before us, it appears to us that if plaintiff had been aware of the existence of this condition he would not have agreed to compromise his claim.”
However, the dissenting member of the WCAB found three problems with plaintiffs assertion of new information:
"First, all medical proofs had been taken well before the redemption date and the contents were presumably available to plaintiff — particularly the diagnosis of his own litigational expert; second, plaintiff’s own petition a year earlier had asserted the pulmonary problem he now claims a new discovery of; third, the existence of 'emphysema’ is itself in serious dispute considering the split of medical opinion.”
These problems caused the dissent to conclude:
"The settlement, per the record made of it, was a conscious agreement to compromise the various medical and causality disputes. It was a substantial amount, freely entered into. Plaintiff’s change of * heart, even coupled with what he claims to be new information, is not enough to convince me that the approved settlement was anything but proper — then and now.”
Defendants argue on appeal that the WCAB erred in affirming the assistant deputy director’s reversal of the redemption order because his reversal was improperly predicated on nothing more than plaintiffs change of heart concerning the desirability of settling his claim for the amount agreed upon. We agree.
MCL 418.837; MSA 17.237(837) provides for review of a referee’s decision affirming or rejecting a redemption agreement. That statute provides in pertinent part:
"The director may, or upon the request of any of the parties to the action shall, review the order of the hearing referee entered under this section. Unless review is ordered or requested within 15 days of the date the order of the hearing referee is mailed to the parties, the order shall be final. In the event of review and in accordance with such rules as the director may prescribe and after hearing, the director shall enter such order as he deems just and proper. Any such order of the director may be appealed to the board within 15 days after the order is mailed to the parties.” MCL 418.837(2); MSA 17.237(837X2).
Whether the assistant deputy director properly decided that the instant redemption agreement was unjust and improper is a question of law. See Solo v Chrysler Corp (On Rehearing), 408 Mich 345, 350; 292 NW2d 438 (1980) (the approval of a redemption agreement is not recognized as a finding of fact).
Prior to 1980, the Bureau of Workers’ Disability Compensation apparently treated the 15-day appeal period as a "cooling off’ period. During this time the director could automatically set aside an agreement if either party decided that it no longer wished to settle. Harrington v Brown Brothers, Inc, 409 Mich 468; 295 NW2d 491 (1980). The Court in Harrington disapproved of this treatment:
"We are satisfied that the board has not correctly read or applied these provisions. The board’s policy of automatically setting aside the referee’s order of approval if one of the parties has a change of heart within 15 days is in direct conflict with the legislative intent to have the director hold a hearing and exercise his discretion in an order he 'deems just and proper’.
"The referee’s order may be reviewed by the director on his own initiative or must be reviewed upon the timely request of either party to determine whether the referee erred in concluding that the redemption agreement serves the purposes of the act or that for some reason the approval order is not just and proper. Whatever effect, if any, a party’s 'change of heart’ should have on the referee’s order of approval is something the director should decide in making his order on review. This 'change of heart’ cannot, however, form the basis for automatically setting aside the approval order without hearing or evaluation by the director.” 409 Mich 472-473.
In the instant case, plaintiff did not allege only that he had changed his mind. Rather, plaintiff also asserted that he decided against the redemption agreement because he discovered that Dr. Newman had diagnosed him as suffering from emphysema. Nothing in Harrington prevents a director from reversing a redemption order when one of the parties subsequently discovers new information. In fact, the Supreme Court in Solo v Chrysler Corp, supra, allowed recission of a workers’ compensation agreement long after the 15-day appeal period had ended when the injured party realized that her injuries were more serious than she had expected or realized. There, the - Court relied on the general rule that a contract is unenforceable if mistakes of fact are made. Id., pp 352-353.
Since the Supreme Court has implicitly deemed permissible the reversal of a redemption order for mistakes of fact, the deciding issue in the instant case is whether the assistant deputy director correctly determined that plaintiff had discovered new information, since he found plaintiff’s change of heart, based as it was on this new information, to be a valid reason for reversing the redemption order. We conclude that the determination was not justified.
Plaintiff claimed that he had no knowledge of Dr. Newman’s diagnosis of emphysema until after he had already redeemed defendants’ liability. However, plaintiffs attorney was well aware of Dr. Newman’s diagnosis, since Dr. Newman appeared as plaintiffs witness. An attorney acts as an agent of his client. Fletcher v Bd of Ed of School Dist Fractional No 5, 323 Mich 343, 348; 35 NW2d 177 (1948). As an agency relationship exists between the two, a plaintiff is charged with the knowledge of his attorney. Geel v Goulden, 168 Mich 413, 419-420; 134 NW 484 (1912). Consequently, even if plaintiff did not have actual knowledge of the emphysema diagnosis prior to settling his compensation claim, plaintiff cannot now assert that this information was new or unavailable to him.
Nor would imputing plaintiff with the knowledge possessed by his attorney in this case cause plaintiff an undue hardship. The Court in Solo v Chrysler Corp, supra, based its ruling primarily on unfairness potentially caused by the imperfections of medical science, which could result in complete misdiagnosis. Id., p 354. However, Dr. Newman’s diagnosis of emphysema in the instant case was made well before the parties entered into their redemption agreement. Moreover, plaintiff alleged in his initial petition that he suffered from cardiopulmonary problems. Plaintiff was aware at all times that he claimed "lung” problems and specifically relinquished any claim to further recovery from defendants because of those lung problems at the redemption hearing. It is not clear, in fact, that plaintiff did or does suffer from emphysema; although Dr. Newman testified in his deposition, that plaintiff might suffer from "residual emphysema”, Dr. Bates denied the presence of any such disease.
The assistant deputy director therefore errone ously concluded that plaintiffs assertion of new information was sufficient to reverse the referee’s redemption order. As the reversal was based solely on plaintiffs change of heart and on an unsupported claim of new information, the WCAB erroneously affirmed the assistant deputy director’s reversal.
Reversed and the redemption order reinstated.
No costs, a public question being involved. | [
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Per Curiam.
Respondent, the decedent’s maternal aunt, appeals by right from an order determining that petitioners, allegedly the decedent’s half-sister and half-brother, are the sole heirs of her estate. Although the decedent’s mother was never married to Tharman Gibbs, ample evidence that he was decedent’s natural father was presented at the hearing to determine heirs. Section 111 of the Revised Probate Code states in part:
"(4) If a child is born out of wedlock or if a child is born or conceived during a marriage but not the issue of that marriage, a man is considered to be the natural father of that child for all purposes of intestate succession if any of the following occurs:
"(c) The man and the child have borne a mutually ' acknowledged relationship of parent and child which began before the child became age 18 and continued until terminated by the death of either.” MCL 700.111; MSA 27.5111.
Substantial evidence was presented supporting the probate court’s finding that the decedent and Tharman Gibbs bore a mutually acknowledged relationship of parent and child which began before the decedent became 18 and ended at the death of Mr. Gibbs. Respondent does not contest this finding on appeal.
Respondent claims that the trial judge erred by applying the provisions of the Revised Probate Code, despite the fact that Tharman Gibbs died before the code’s effective date. The trial judge correctly held that the date of Gibb’s death was irrelevant. The Revised Probate Code provides only a limited number of exceptions to the rule of full application in proceedings pending on its effective date or commenced after that date. In re Sutherby Estate, 110 Mich App 175, 177; 312 NW2d 200 (1981). The first exception applies where the interests of justice require adherence to the procedure formerly used. MCL 700.992(a); MSA 27.5992(a). We do not believe that justice requires that one set of putative heirs be chosen over another. The second exception is where the application of the Revised Probate Code provisions is infeasible. MCL 700.992(a); MSA 27.5992(a). No practical problems prevent application of the new code provisions. Finally, the new provisions may not be applied where their application would impair any right which had accrued prior to the code’s effective date. MCL 700.992(c); MSA 27.5992(c). No right to inherit vested in respondent, because the decedent (not Tharman Gibbs) passed away after the effective date of the new code. Determinations of heirs are governed by statutes in effect at the time of the decedent’s death. In re Adolphson Estate, 403 Mich 590, 593; 271 NW2d 511 (1978). Because no right to inherit ever vested in the respondent, no vested rights are impaired by the application of the new code provisions.
Respondent’s second argument is very similar to her first. It is based on MCL 700.111; MSA 27.5111, which states in part:
"(5) Property of a child born out of wedlock or a child born or conceived during a marriage but not the issue of that marriage passes in accordance with the law of intestate succession except that the father and his kindred shall not be considered as relatives of the child unless the child might have inherited from the father as provided in this section.”
Respondent claims that, as relatives of the decedent’s father, petitioners may only inherit if the decedent might have inherited from her father. While ingenious, this argument has no merit. Because decedent’s father died before the effective date of the Revised Probate Code, respondent argues, the new code does not apply and the rights of the illegitimate child must be determined under the old law. The language of the statute itself defeats respondent’s claim. To determine whether the father and his kin shall be considered relatives of the illegitimate child for purposes of intestate succession, one must ask whether the child "might have inherited from the father as provided in this section”, i.e., § 111 of the Revised Probate Code. The illegitimate child need not have actually inherited anything from the father. She need not have been an heir at the time of his death. The child need only show that she might have inherited from the father "as provided in this section”, i.e., under the rules set forth in the new code. The time of death of the father is irrelevant to a determination of the parties’ rights.
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Cynar, J.
Petitioner appeals as of right from a decision of the State Board of Tax Appeals, issued August 2, 1982, affirming a retail sales tax assessment against petitioner in the amount of $14,175.85.
The Holy Spirit Association for the Unification of World Christianity (Unification Church or petitioner) was founded by the Reverend Sun Myung Moon in Korea in 1954. The Unification Church is presently active in more than 100 nations, including the United States. It was incorporated in California in 1961 and is registered in Michigan as an out-of-state corporation.
There is a heavy emphasis in the Unification Church upon public proselytizing and solicitation of funds to support church activities. The fund-raising endeavors of the membership in Michigan irked certain local officials and ultimately piqued the interest of the respondent, Department of Treasury, which believed that church members might be engaged in retail sales.
On January 9, 1979, and again on June 8, 1979, respondent notified petitioner by mail that respondent had been apprised of retail sales activities by church members, and requested that petitioner complete and return a sales tax license application. No response was received to either letter. On August 2, 1979, respondent issued a notice of intent to assess against petitioner sales tax covering the period of July 1, 1975, through June 30, 1979. The assessment proposed was $10,000 in retail sales tax plus penalty and interest, a total of $14,175.85. Once again, no response was forthcoming from petitioner.
Three weeks later respondent issued a notice of final assessment; the assessment amount was not changed. On September 19, 1979, petitioner filed a notice of appeal to the State Board of Tax Appeals (SBTA), claiming that it had not engaged in sales at retail during the relevant period.
Following an evidentiary hearing, the SBTA affirmed the assessment in a brief written opinion:
"Appellant is a California non-profit corporation with its principal office at 4 West 43rd Street, New York, New York 10036. During the period July 1, 1975, through June 30, 1979, members of appellant solicited funds and distributed personal tangible property such as flowers and candy.
"Appellee issued the sales tax assessment on the belief that the members were selling the personal property in question. Appellant contends that the members were not selling the items but were making gifts of the items, and at the same time were soliciting funds as contributions. The sole issue is whether the subject items were 'sold’ or 'given away’. Testimony was received by witnesses for both parties, appellant’s witness indicating that the personal property items in question were given away and not sold, and the witness for appellee, a former member of appellant, testifying that the articles in question were definitely sold and not given away.
"After careful review of the testimony presented at the hearing, it is the belief of the board that the burden of proof rests upon the appellant, and he [sic] has failed to overcome it.”
Petitioner vigorously maintains that imposition of a sales tax upon the activities of its membership would affect an unconstitutional tax upon its right of free exercise of religion, see Kollasch v Adam-any, 99 Wis 2d 533; 299 NW2d 891 (1980), rev’d 104 Wis 2d 552; 313 NW2d 47 (1981); State v Van Daalan, 69 SD 466; 11 NW2d 523 (1943), or, in the alternative, that it would involve an impermissible entanglement with religious affairs, Pletz v Secretary of State, 125 Mich App 335, 373-374; 336 NW2d 789 (1983); First Lutheran Mission of Knolls v Dep’t of Revenue, 44 Colo App 417; 613 P2d 351 (1980); Tribe, American Constitutional Law, § 14-12, pp 865-880 (1978). We do not reach these issues, however, since we find that the decision of the SBTA was not supported by competent, material, and substantial evidence on the whole record. Const 1963, art 6, § 28.
As a preliminary matter, we consider petitioner’s argument that the SBTA misallocated the burden of proof. It is apparent from the board’s opinion that it laid upon petitioner not only the burden of refuting the assessment amount, but also the burden of demonstrating that it had not engaged in sales at retail. Section 17 of the General Sales Tax Act, MCL 205.51 et seq.; MSA 7.521 et seq., empowers the revenue division of the Department of Treasury to make a deficiency assessment. This section provides, so far as is relevant, as follows:
"Every person liable for any tax imposed under this act shall keep an accurate and complete beginning and annual inventory and purchase records of additions to inventory, complete daily sales records, receipts, invoices, bills of lading and any and all pertinent documents in such form as the department may require and wherever an exemption from sales tax is claimed by reason of the sale being for resale or for any of the other exemptions or deductions granted under this act, there shall be a record kept of the name and address of the person to whom the sale is made, the date of the sale, the article purchased, the use to be made of the article, the amount of the sale and if that person has a sales tax license, that number shall also be noted thereon.
"In the event the taxpayer fails to file a return or to maintain or preserve proper records as prescribed in this section or the department has reason to believe that any records maintained or returns filed are inaccurate or incomplete and that additional taxes are due, the department shall be empowered to assess, upon such information as is available or may come into possession of the department, the amount of the tax due from the taxpayer. Such assessment after notice and hearing as hereinafter provided shall be deemed to be prima facie correct for the purpose of this act and the burden of proof of refuting such assessment shall be upon the taxpayer.” (Emphasis added.) MCL 205.67; MSA 7.538.
The General Sales Tax Act also provided a mechanism for parties desiring to contest the assessment. MCL 205.72; MSA 7.543, operative at the time of proceedings below, provided that upon receiving notice of intent to levy the deficiency the taxpayer could "demand a hearing on the question of the levy of such deficiency”. If a hearing was demanded, the contestant was entitled to reasonable notice and other procedural safeguards:
"The taxpayer shall be entitled to appear before the department and be represented by counsel and present testimony and argument. After the hearing the depart ment shall render its decision in writing and, by order, levy any deficiency found by it to be due and payable.
"If any taxpayer is aggrieved by any decision of the department, he may appeal under the provisions of Act No. 122 of the Public Acts of 1941, as amended * * MCL 205.72; MSA 7.543. Repealed by 1980 PA 164, imd. eff. June 18, 1980.
1941 PA 122 was the act establishing the Department of Revenue and provided for appeals to the SBTA. Section 7 of that act, governing appeals procedure, provided in relevant part:
"The state board of tax appeals, following the filing of such answer, shall have jurisdiction to review such assessment, decision or order and both the appellant and the department shall have the right to swear witnesses and to be represented by counsel before said state board of tax appeals. Said hearing shall be heard within 60 days after filing of said answer, as in a court not of record and the legal rules of evidence prevailing in the circuit courts of this state shall be enforced. The burden of proof in any appeal from any assessment, decision or order shall rest with the appellant.” (Emphasis added.) MCL 205.7; MSA 7.657(7).
We initially note that petitioner may not now contest the allocation of the burden of proof concerning the accuracy of the deficiency assessment. In objecting to examination concerning the existence of fund-raising books or records maintained by the church, petitioner’s counsel stated: "[W]e are not contesting the amount of the deficiency but solely the question of whether or not the Church has engaged in any sale activity within the State of Michigan”. The question remains whether petitioner had the burden of proving that it was not making taxable sales. We believe that it did.
Section 7 of the revenue department statute, supra, is the controlling provision, and it clearly places the burden of proof upon the appellant. A statute unambiguous on its face is to be enforced as written, and courts will avoid further interpretation or construction of its terms. Detroit v Redford Twp, 253 Mich 453; 235 NW 217 (1931); Espinoza v Bowerman-Halifax Funeral Home, 121 Mich App 432, 436; 328 NW2d 657 (1982), lv den 417 Mich 1017 (1983).
We concur with petitioner that § 17 of the General Sales Tax Act, governing deficiency assessments, shifts the burden of proof after notice and hearing only as to the amount of the assessment. By its terms the section would apply to petitioner if it had any sales tax liability, a matter dependent upon proofs apart from those pertinent to the assessment amount. See Arbor Sales, Inc v Dep’t of Treasury, 104 Mich App 181; 304 NW2d 522 (1981), noting that a person or organization may not be found liable for a tax merely because it fails to keep accurate and complete records.
We reject, however, the implication in petitioner’s argument that respondent could not proceed under this section because it had not shown that petitioner was a "taxpayer”. The language of MCL 205.67; MSA 7.538 does not exclude persons or entities which subjectively believe they are not liable under the General Sales Tax Act. Indeed, the statute explicitly provides: "Whenever in the judgment of the department it is necessary, it may require any person, by notice served upon him, to make a return, render under oath such statements, or keep such records, as the department deems sufficient to show whether or not such person is liable to tax under this act”. (Emphasis added.) MCL 205.67; MSA 7.538. In this case such notice was given petitioner, and it did not respond.
We also reject petitioner’s assertion that § 17 of the General Sales Tax Act, affecting the burden of proof only as to the assessment amount, is exclusively controlling. As noted above, the General Sales Tax Act provided that appeal from an adverse department ruling could be taken under the provisions of 1941 PA 122. MCL 205.72; MSA 7.543. Section 7 of that act governed the SBTA appellate procedure, which unambiguously placed the burden of proof on the appellant. We find no conflict in these separate statutory provisions. Petitioner’s contention that such allocation of the burden of proof denied it procedural due process is undermined by its failure to seek an evidentiary hearing prior to taking the administrative appeal. MCL 205.72; MSA 7.543. We conclude that petitioner bore the burden of proving that it had not engaged in taxable retail sales.
The burden of proof encompasses two separate concepts: (1) the risk of nonpersuasion, which does not shift during the course of the hearing; and (2) the burden of going forward with the evidence, which may be shifted to the opposing party. Kar v Hogan, 399 Mich 529, 539-540; 251 NW2d 77 (1976). Petitioner’s evidentiary presentation consisted of the testimony of two of its members and submission of a church document on fund raising promulgated during the spring of 1977. Scott Greene, petitioner’s public relations director in Michigan, and Ricky Sorenson, assistant director of the church in Michigan, rendered testimony concerning fund-raising procedure.
Greene indicated that every church member was responsible for carrying on the church’s evangelical mission, which included the solicitation of funds. Although there was no "standard line” used in seeking donations, Greene delivered a sample of his approach:
"My name is Scott Greene. I’m a volunteer for the Unification Church, and today we are raising funds to help support our Christian education and religious activities. Could you please help us with your support?”
Greene admitted that items such as candy or flowers were frequently distributed in conjunction with the solicitation. However, both Greene and Sorenson indicated that donations were often received where no flowers or candy had been given, and Greene testified that these gifts were commonly bestowed by members even when no donation was received. Greene further testified that many people requested receipts to verify the fact and amount of their contribution for tax purposes.
The document submitted by petitioner concerning fund-raising procedure included these paragraphs:
"Since we are not selling items, but asking for donations, two words that create a wrong impression are 'buying’ and 'selling’. The use of these two words imply that our solicitation is of a commercial or marketing nature. Funds solicited are strictly on a donation basis and a distinction must be made between the two concepts. The easiest way to phrase the amount we would like to receive as a donation is, 'Most folks help with one dollar.’ Or, 'Most everybody gives one dollar.’
"Remember that no product used in connection with solicitation of contributions may be offered for sale. The product must be made available to all those willing to listen to your witnessing on the teachings and activities of the church, whether or not a contribution is actually made.”
According to Greene, every church member was provided with a copy of this policy statement. Although it was not handed down until the spring of 1977, Sorenson, familiar with the custom and practice of the church in Michigan prior to pro mulgation of the policy statement, indicated that similar standards were followed at that time. Church members were to ask for donations, but to "make very clear that we weren’t selling anything”.
Although Greene would "never ask for less than a dollar”, he would receive "anywhere from nothing to several dollars”. If a person inquired as to the price of an item, Greene would respond that there was no price, but that a donation of one or two dollars would be appreciated. Sorenson also indicated that the amount of individual donations varied greatly.
We are satisfied that at this point in the hearing, petitioner had met its burden of going forward with the evidence. The sales tax is levied upon "persons engaged in the business of making sales at retail”. MCL 205.52; MSA 7.522. The General Sales Tax Act defines the term "sale at retail” as:
"a transaction by which is transferred for consideration the ownership of tangible personal property when the transfer is made in the ordinary course of the transfer- or’s business and is made to the transferee for consumption or use, or for any other purpose than for resale”. MCL 205.51(l)(b); MSA 7.521(l)(b).
The proofs put in by petitioner show that its members used the distribution of low-cost articles to facilitate the solicitation of funds. The primary purpose of this activity is to raise money for the Unification Church, which respondent concedes is a bona fide religious organization. Transactions similar to those described by Greene and Sorenson were discussed by two federal courts in the context of challenges to anti-solicitation ordinances. In Evans v Fullard, 444 F Supp 1334, 1335 (WD Penn, 1978), the Unification Church sought injunc tive relief from an ordinance requiring solicitors or canvassers to obtain a permit and license. A solicitor or canvasser was defined as a person "taking or attempting to take orders for sale of goods * * * or for services”. The Evans court found that it could avoid First Amendment analysis and decide the issue in the church’s favor based upon the character of the solicitations:
"While the solicitors did have flowers and candy with them on occasion, the evidence was that these items were not sold but were given to those who made contributions. No price was stated for the items of personal property, nor was there any set amount of donation solicited in exchange for either a specific amount of product or identified personal property.” (Footnote omitted.) Evans, supra, p 1137.
In Love v Mayor, City of Cheyenne, 448 F Supp 128 (D Wy, 1978), members of the Unification Church challenged an ordinance which in essence made door-to-door solicitation unlawful. Noting that such ordinances could not constitutionally prohibit noncommercial solicitation, the court stated:
"There can be no doubt that 'literature evangelism’ activities engaged in by the Plaintiffs Love and Martinez on behalf of the Unification Church are non-commercial in nature. Members of the Church do not receive commissions for their work. In making their door-to-door solicitations, nothing is ever sold. Contributions are requested and items may be gratuitously extended to the contributor because of his or her donation, but if a resident inquires as to the price of an item the church member explains that it is not for sale and that the item is offered to contributors only as a token of appreciation for a contribution. The average value of the items offered is 40 cents, whereas the average contribution is between one and two dollars and, in many instances, th^ resident rejects the gift despite the fact that a contribution has been made.” Love, supra, pp 130-131.
Similarly, we are persuaded that the transactions described by Greene and Sorenson are not sales at retail; rather the distributions of personal property in these transactions are merely incidental to the solicitation of contributions. See, also, Hope School v United States, 612 F2d 298, 304 (CA 7, 1980), but cf. People v Wood, 93 Misc 2d 25; 402 NYS2d 726 (1978). A key statutory element, that the property be transferred for consideration, is absent. MCL 205.51(l)(b); MSA 7.521(l)(b). In some cases, the gift of candy or flowers is bestowed even when no donation is received. In other cases the donation is disproportionate to the value of the item offered, or the donor refuses to accept the item; in both situations it is obvious that the money is given with charitable purpose, or for a tax deduction, but not as consideration for the offered property. The donor is told that the items have no price, and though definite amounts may be stated as what "most people give”, greater or lesser amounts are accepted.
Petitioner, in our view, met its burden of persuasion, Kar v Hogan, supra. Respondent’s proofs were simply not of the same caliber. Its sole witness, Steven Kemperman, had at one time been a member of the Unification Church and had participated in fund raising. When Kemperman solicited funds, he would indicate that he was working for "Christian counseling centers”, and would ask people to "buy some flowers to help out or buy a box of candy to help out”. The witness indicated that each item offered had a set price, and that he never took less. Moreover, Kemperman would not even distribute religious literature to someone whom he solicited from unless he or she purchased candy or flowers.
Respondent’s proofs included a written translation of a speech by Reverend Moon, in which he revealed to his followers the importance of fund raising and suggested that the sale of flowers could be a lucrative enterprise.
As previously noted, the decision of the SBTA may not be upheld unless supported by competent, material, and substantial evidence on the whole record. "Substantial evidence” must be more than a scintilla of evidence, though it may be substantially less than the preponderate of evidence necessary for most civil cases. Russo v Dep’t of Licensing & Regulation, 119 Mich App 624, 631; 326 NW2d 583 (1982). We find the evidence legally inadequate under this standard to show that petitioner had engaged in sales at retail, as defined in MCL 205.51(l)(b); MSA 7.521(l)(b), during the relevant period. The value of Kemperman’s testimony is severely eroded by the fact that he engaged in fund raising in Michigan for only three months during the four-year assessment period. Also, there was no evidence that Reverend Moon’s speech, although seen by Kemperman in Boston in 1974, served as a procedural guide for fund raising in Michigan during the relevant years. Sorenson claimed that he had never seen that particular speech. Petitioner’s witnesses rendered testimony that the church’s national fund-raising policy was followed in Michigan, and that similar principles were adhered to prior to formal promulgation of the policy in 1977. The transactions described by petitioner’s witnesses were consistent with the fund-raising policy, and in our view did not constitute taxable retail sales. Proofs submitted at the hearing show at best isolated sales by an entity not engaged in the business of retail sales and therefore not subject to sales tax. MCL 205.51(l)(f); MSA 7.521(l)(f). We decline respondent’s invitation to consider petitioner’s liability under the Use Tax Act, see Terco, Inc v Dep’t of Treasury, 127 Mich App 220; 339 NW2d 17 (1983), and MCL 205.91; MSA 7.555(1), since this matter was not the subject of the proceedings below.
Reversed.
MCL 205.779(3); MSA 7.650(79)(3) purported to require all cases previously appealable to the SBTA to be appealed to the State Tax Tribunal after December 31, 1976. However, the existence and jurisdiction of the SBTA continued until it was formally abolished by 1980 PA 162, effective December 31, 1981. Dep’t of Treasury v Sperandeo, 112 Mich App 337, 339-340; 315 NW2d 863 (1981), lv den 414 Mich 953 (1982); Queen Airmotive, Inc v Dep’t of Treasury, 105 Mich App 231; 306 NW2d 461 (1981). It was therefore properly able to hear this case.
Cantwell v Connecticut, 310 US 296; 60 S Ct 900; 84 L Ed 1213 (1940); Martin v Struthers, 319 US 141; 63 S Ct 862; 87 L Ed 1313 (1943).
Petitioner claims that Kemperman’s testimony should have been accorded little weight, since as a disenfranchised former member of the Unification Church he could harbor some animosity against it. Petitioner neglects to point out that its two witnesses, as current church members, had at least as much incentive as did Kemperman to abandon their objectivity. | [
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Beasley, J.
Appellants, who are members of the Huron River Area Credit Union, formerly known as Ann Arbor Co-Op Credit Union, appeal from an order of the Washtenaw County Circuit Court affirming a decision of the Commissioner of the Michigan Financial Institutions Bureau granting a bylaw amendment to the Ann Arbor Co-Op Credit Union.
This appeal is brought pursuant to the Michigan Constitution of 1963, art 6, § 28, as implemented by the Michigan Administrative Procedures Act.* While various issues are raised on appeal which will be dealt with in detail, the primary issue in this case involves interpretation of the common bond provision of the credit union statute, which provides in part as follows:
"Credit union membership shall consist of the incorporators and other persons as may be elected to membership and subscribe to at least 1 share, pay the initial installment on the share, and pay any entrance fee required by the bylaws. Deposits may be accepted and maintained pursuant to section 4(x) without the depositor subscribing to or paying for a share in the credit union. Organizations, incorporated or otherwise, composed for the most part of the same general group as the credit union membership may be members. Credit union organization shall be limited to groups, of both large and small membership, having a common bond of occupation or association, or to groups within a welldefíned neighborhood, community, or rural district and 1 or more credit unions may be organized to serve those groups. A community credit union may be organized whose field of membership is composed of individuals who have a common bond based on relatively close geographical proximity to one another, personal acquaintance among the residents, and the existence of a community of interests, activities, and objectives.” (Emphasis added.)
The Ann Arbor Co-Op Credit Union, now known as the Huron River Area Credit Union, was organized as a Michgan credit union corporation in 1937 by seven persons, all of whom were members of the Ann Arbor Co-Operative Society, Inc., which had been incorporated in 1936. Initially, membership in the credit union was limited to persons who were members of the cooperative society. Prior to the bylaw amendment, which is part of the subject matter of this appeal, article III, § 1 of the credit union’s bylaws provided:
"Membership in this credit union shall be limited to persons who are members of the Ann Arbor Cooperative Society, Inc.; employees of this credit union; members of their immediate families; also organizations, incorporated or otherwise, composed for the most part of the same general group making up the membership outlined above. A spouse of a deceased member may be elected to membership at any time prior to remarriage. A subscribing member shall not be eligible to vote, or hold office, until one fully paid share is owned.”
The proposed amendment to the bylaw, which was subsequently approved by the Financial Institutions Bureau (FIB), provides as follows:
"Membership in this credit union shall be limited to
"A. Individuals who are employed by organizations whose total employment is 400 or less and have agreed to provide this credit union with payroll deduction and are located in Livingston or Washtenaw Counties, except those persons eligible for primary membership in another occupational credit union;
"B. Members of Ann Arbor Co-Op Credit Union on the date of approval of this amendment;
"C. Individuals employed by an organization providing payroll deduction exclusive of 'net pay’ to Ann Arbor Co-op Credit Union on the date of approval of this amendment;
"D. Members of the immediate family of the foregoing; employees of the credit union;
"also organizations, incorporated or otherwise, composed for the most part of the same general group making up the membership outlined above. A spouse of a deceased member may be elected to membership at any time prior to remarriage. A subscribing member shall not be eligible to vote, or hold office, until one fully paid share is owned.”
The credit union intervened in the circuit court proceeding, filing a brief which describes the factual setting for this appeal. After describing the organization and incorporation of the Ann Arbor Co-Operative Society, the brief correctly notes that, in 1980, the FIB approved the merger of Livingston Community Federal Credit Union into the within credit union, without requiring those members to join the society.
By definition, very few persons could join the credit union without first joining the society. To join the society, a person had to pay a one-time membership fee, which, for many years, was $10. On December 16, 1980, the society’s board of directors increased the fee to $15 and refused to reconsider when the credit union requested it. The starting effective date of the increase was apparently in February, 1981. The credit union claims that in the highly competitive market which existed by that time, the membership fee, and particularly the increase, had become a serious handicap to the credit union in attracting new members and depositors.
In December, 1980, the credit union began discussions with the FIB regarding possible changes in its field of membership. Eventually, the FIB advised the credit union that it would approve a bylaw amendment creating the field of membership eventually selected by the credit union. On July 24, 1981, the FIB issued a staff recommendaton for an order approving the amendment to the bylaws and the certificate of organization. In their recommendation, the staff dealt with interpretation of the statutory provisions concerning common bond, noting that two arguments in particu lar were made against the proposed common bond: (1) that employee groups of under 400 employees do not share a common bond under the law and (2) that a hybrid membership of current credit union members and a future industrial base share no common bond under the law. The staff responded by indicating that there are approximately 11 state chartered credit unions with a field of membership similar to the one proposed in the bylaw amendment. The staff recommendation says the purpose of this type of charter is to enable the credit union to service employer groups that are too small to support their own credit union and are willing to provide payroll deduction. The recommendation also says that the bureau has on file approximately 15 state chartered credit unions whose common bond is membership in a co-operative association, and that there are no restrictions on who may join the association.
In his brief, the Attorney General says the commissioner was faced with a Hobson’s choice, indicating that the commissioner did not view her decision as a simple one. He argues that the crux of the case involved change in the credit union’s name and field of membership.
On September 9, 1981, the commissioner issued an "order to disapprove request for hearing and to approve amendment to bylaws and certificate of organization”. In approving this request to amend article III, § 1 of its bylaws, the commissioner responded to the various issues raised by the appellants, finding specifically with respect to common bond as follows:
"The commissioner finds that the proposed field of membership is permissible. This field of membership allows credit union membership to employees of smaller businesses which may otherwise not be able to economi cally provide credit union services to their employees. Section 5 of the credit union act is satisfied in that the credit union will now be organized to serve easily identifiable groups within a well-defined neighborhood. As indicated above, the commissioner has determined that the membership vote to provide this form of organization was valid.”
When appellants appealed to the circuit court from the commissioner’s order, the circuit judge approved the commissioner’s findings, holding that he was satisfied that the proposed field of membership did not lack a common bond. We are satisfied that the credit union statute does not prohibit a credit union from changing its field of membership.
In deciding whether to approve such changes, the FIB considers whether the change is consistent with the wishes of the credit union membership, whether the credit union will remain in a safe and viable financial condition, and whether the remaining field is legally permissible.
In interpreting the statute, at the outset we recognize that we face a somewhat anomalous situation. This credit union corporation, which was organized 40 to 50 years ago by a co-operative corporation, appears to have far outgrown its parent. This is not the only credit union whose existence began and continues to rest upon a co-operative corporation. To some extent, it would appear that some of the co-operative corporations so situated only continue to exist as the basis for continuation of their off-spring credit union corporations. It is unfortunate that the judiciary is confronted by this situation, when the answers appear to rest with the Legislature. In short, we urge the Legislature to address its attention to this problem and to enact whatever legislation may be wise and desira ble to eliminate ambiguity and to assure the existence of large and viable credit union corporations without leaving them dependent upon co-operative corporations whose current connections with the credit unions are in many instances tenuous at best.
The credit union statute, and the common bond provision in particular, were the product of an earlier time and different circumstances. The regulatory agency, which in this state is now called the Financial Institutions Bureau, has had no choice but to attempt, under statutes which have in some respects become outmoded (and were always confusing), to regulate credit unions which have grown large and strong. We note that in Michigan, in contrast to North Carolina, neither the banking nor the savings and loan institutions have attempted to intervene and to defeat the efforts of this credit union to expand its field of potential membership.
While we would welcome more and better legislative guidance in the form of updating of the credit union statute, we are not inclined to interpret the statute before us as requiring us to cripple and limit the operations of strong and viable credit union corporations. We do not interpret the current credit union statute as being designed to curtail possible competition by the credit unions with the banking and savings and loan institutions. We view the intent of the Michigan credit union statute to be to encourage growth of credit unions and increases in membership. Against that background, we now address ourselves to the specific language of the statute.
The statute provides that the credit union orga nization shall be limited to groups, which groups may be of both large and small membership. The groups must have a common bond of occupation or association, or be groups within a well-defined neighborhood, community, or rural district. One or more credit unions may be organized to serve these groups. The key word in this discussion is group, whose commonly accepted definition is a number of persons gathered closely together and forming a recognizable unit. However, the statute also provides that a community credit union may be organized whose field of membership is composed of individuals who have a common bond based on relatively close geographical proximity to one another, personal acquaintance among the residents and the existence of community interests, activities, and objectives. The FIB determined that the field of membership provided by the amendment had a common bond, as that term is used in the statute.
On appeal, the Michigan Constitution affords judicial review to determine whether the decision of the FIB was authorized by law and, in cases where a hearing is required, whether the decision is supported by competent, material, and substantial evidence on the whole record. Appellants’ attack here is primarily as to the legality of the determination and, specifically, whether the FIB decision rests upon an incorrect interpretation of the common bond requirement of the statute. We would agree that the language of the statute is to a degree ambiguous. However, we do not agree that the ambiguity redounds to the benefit of appellants. On the contrary, we believe that the FIB was entitled to resolve the ambiguities of the statute in the manner which it did, namely, to adopt what appellants appear to consider a loose definition of the term.
In this case, we hold that the first limitation on membership, as provided in subsection A of the amended bylaw, is permissible under the statute. Subsection A of the amended bylaw defines groups of individuals with a common bond of occupation or association, namely, (1) employees of organizations (employers) located in Livingston or Washtenaw Counties, with no more than 400 employees, (2) which organizations (employers) agree to provide the credit union with payroll deductions, and (3) excepting persons eligible for primary membership in another occupational credit union.
The conclusions reached by the FIB are not unlike the federal regulations under 12 USC 1751 et seq., which regulations authorize an occupational common bond for a credit union based on employment by different employer units in a specified geographical area. The feature which provides commonality in the employment relationship, as distinguished from one based solely on association, is the employment relationship itself.
We agree that in establishing permissible fields of membership, economic viability must be considered. This simply means that while 50 or 60 years ago a very small group may have been capable of supporting a successful credit union, under today’s economic circumstances that is no longer possible, but a collection of several small groups could provide enough members to make a viable credit union.
Appellants attack the proposition that employees of organizations with total numbers of employees of 400 or less and who agree to provide payroll deductions possess an occupational common bond. Appellants do admit that employees of one company possess a common bond with each other. We agree that employees of a single employer, e.g., a major automobile company, have an occupational common bond in the context of working for a single employer having multiple occupational similarities and enjoying shared occupational interests, activities, and objectives. From that proposition, we analogize that size of a company (not more than 400 employees) is one factor that may support a conclusion that a common bond exists. Another is willingness of an employer to provide payroll deductions. Thus, we do not accept appellants’ premise that there is insufficient common bond here to satisfy the statute.
Appellants place considerable emphasis upon North Carolina Bankers Ass’n v North Carolina Credit Union Comm. In that case, the North Carolina Supreme Court emphasized what it deemed to be unfair competition between credit unions on the one hand and banks and savings and loan associations on the other. As previously indicated, we are not confronted by any such issue. We believe that issues of competition among financial institutions are essentially legislative. The North Carolina Supreme Court rested decision upon its conclusion that application of the correct interpretation of the common bond requirement of the North Carolina statute indicated an error of law in permitting expansion of the field of membership provision.
While recognizing some similarities in the statutes of Michigan and North Carolina, we are neither bound by nor persuaded by the restrictive interpretation the North Carolina court put on the common bond provision. We decline to adopt a strict, limiting interpretation of the statute that would outlaw the FIB approval and require reversal.
Thus, we hold that these employees, working for employers of 400 or less, located in Livingston or Washtenaw Counties and providing the credit union with payroll deductions, are within the statutory definition of a common bond of occupation or association in a specified geographic area. Thus, strictly speaking, it is unnecessary to decide whether these employees come within either the comon bond afforded by groups within a well-defined community or the so-called community credit union provided for in the last sentence of § 5 of the statute. In so holding, we recognize that the statute is awkwardly worded and some of its terminology vague and uncertain, but we decline to second-guess the FIB in its effort to construe the statute reasonably. We agree with the Michigan Credit Union League, a Michigan nonprofit membership corporation, which was permitted to file an amicus brief, that a decision upsetting the FIB order could have wide-ranging adverse consequences on credit unions and their capacity to serve their members.
While we do not believe that a common bond is required once a credit union has been validly organized, we are in accord with the FIB policy of requiring, to the extent practicable, a continuing common bond of some sort after organization.
In the within case, the groups are similar in occupation or association, i.e., each group of employees is employed by an employer located in Livingston or Washtenaw County, which employs 400 or less employees and furnishes the credit union with payroll deductions. Since we believe the statute permits a single credit union to have a field of membership consisting of employees of more than one group as long as the composition of each group is based on a single criterion, we find the FIB approval to be in accordance with the statute. There is precedent in Michigan for permitting credit unions whose fields of membership consist of more than one associational group, such as the Suburban Catholic Credit Union and the Lansing Building Trades Council Credit Union.
Three additional issues require discussion. First, appellants strongly object to the implications of the "once a member, always a member” tradition of credit union membership. They contend that such a practice creates a hybrid field of membership; in this case, appending the new occupational bond group to the old associational group, creating a credit union with no common bond between all its members. Appellee-intervenor and amicus curiae contend that the Michigan statute requires only that a common bond exist when a credit union is organized and that the Michigan statute, unlike the federal one, does not require that the bond be maintained by the membership after organization of the credit union.
We agree with the view that a credit union does not violate the statute when it retains existing members after changing its field of membership. Requiring a credit union to expel members not falling within the new field of membership would destroy the current basis for its existence during the change period and greatly inhibit the potential for growth and inherent stability of a credit union.
In the instant case, the FIB has approved a provision in the new bylaws permitting existing members to retain their membership. We believe this to be lawful and proper. The policy reasons behind such a practice are sound. To continually police each credit union member’s current status would, as the Attorney General puts it, create a "regulatory nightmare”.
The next issue concerns the voting procedures used to pass the bylaw amendment. MCL 490.2; MSA 23.482 provides:
"Upon approval by a majority of the members present at a duly constituted annual or special meeting of the members, the membership may amend the certificate of organization and bylaws or delegate or rescind the authority to amend the bylaws to the board of directors. Any proposed action to amend the certificate of organization of bylaws or delegate authority to amend the bylaws shall be stated in a notice of call of the meeting. An amendment to the articles of organization or bylaws shall be approved by the commissioner before becoming operative.”
Appellants argue that the amendments were not adopted at a duly constituted meeting and, thus, the membership lacked legal capacity to adopt them.
On March 25, 1981, the credit union board of directors resolved to call a special meeting for the membership to vote on the proposed bylaw amendments. Notice of the special meeting set for April 15, 1981, was mailed to the membership on April 3, 1981. The notice set forth the existing bylaw provisions and the proposed amendments.
Apparently, due to concern that the FIB would not acept the results of the five-day balloting procedure planned for the April 15 meeting, the board of the credit union met April 4, 1981, and passed the bylaw amendments by an 8 to 1 vote. They also made the membership vote advisory. However, the FIB apparently then advised the credit union that it would not approve the amendments if adopted by the board. The notice of the April 15 meeting was not rescinded by the board, nor was the membership notified by the board of the board’s April 4, 1981, actions.
On April 15, 1981, the special meeting was held at the credit union’s main office. The chairman of the meeting apparently made it clear that the vote would be a binding one, not merely advisory. The meeting was then adjourned and the polls were opened for voting during business hours at the two credit union locations for the next five business days. A majority of the votes cast were in favor of the name change and bylaw amendments.
Appellants argue that the actions of the board on April 4, 1981, voided the notice mailed April 3, 1981, and so, at the April 15, 1981, meeting, the membership lacked the legal capacity to amend the bylaws. Appellants further contend that the vote was not conducted at a duly constituted meeting as required by the statue. Article XVII, § 1 of the bylaws reads:
"These bylaws may be amended by those members present and entitled to vote at the annual or special meeting of the membership or by the unanimous vote of at least a quorum of the board of directors.”_
The commissioner approved the bylaw amendments, finding that the form of notice was proper and that "there is no evidence to indicate that the action taken by the board of directors on April 4 to make the membership vote advisory only had any impact on the final results of the membership vote held pursuant to the April 15, 1981 membership meeting”. As the April 3 notice was never rescinded, the April 15 meeting was held with proper notice.
Appellants refer to a parliamentary definition of the word "meeting”, citing Roberts Rules of Order (1970 ed, p 70):
"A single official gathering of its members in one room or area to transact business for a length of time during which there is no cessation of proceedings and the members do not separate unless for a short recess as defined below.”
They argue that a five-day vote by the credit union membership, conducted at two different locations, did not constitute a 'meeting’ as required by the statute for bylaw amendment.
67A CJS, Parliamentary Law, § 5, p 616, gives a far less restrictive description of the word, stating:
"A deliberative body acts only at a meeting, regular or special, held pursuant to law. An adjourned meeting is legally the continuation of the meeting of which it is an adjournment, and at such a meeting anything may be done which might have been done if no adjournment had taken place.”
The credit union act does not define the word "meeting”. Over the years, the FIB has apparently authorized various balloting procedures ranging from mail ballots for the election of directors to procedures such as that employed in the instant case.
An analogy can be made to corporate stockholders’ meetings where the general trend is to permit corporations to conduct affairs without requiring the physical presence of members at a single time and place. Appellees argue that the extended balloting procedure is akin to an adjourned meeting, with the polls kept open for voting purposes and following the adjournment. The apparent purpose of the five-day procedure was to permit greater membership participation. The commissioner found that "general parliamentary procedure” was followed in the proceedings and did not find error in the voting procedures. We will not overturn her finding in favor of reading appellants’ restrictive definition of the word "meeting” into the statute.
Appellants object that no evidentiary hearing was held prior to making this determination, noting that approximately 400 complaints were filed with the FIB complaining that the vote was conducted in a confusing manner. They also seek to have the election set aside because of thé allegedly improper actions of credit union employees at the polling place during the course of the five-day vote. Appellants contend that misrepresentations or omissions were made regarding the subject matter of the election and that some employees unduly influenced the vote of the members by aggressive campaigning in support of the proposed amendment.
The commissioner validated the election procedure, finding "no evidence of fraud or deceit with regard to the campaigning by credit union employees”. As the circuit court concluded:
"[T]he record shows that the meeting was duly constituted within the meaning of § 2 of the credit union act and adequately complied with the applicable law. Further, the procedures followed were neither unlawful nor did they result in material prejudice to the society. The court is of the opinion that the commissioner did not abuse her discretion nor were her findings contrary to law or the great weight of the evidence.”
While declining to overturn the election, we do take notice of the importance of purity in the election process. It seems obvious that the persons conducting the election and counting the votes have no business "electioneering” at the voting place.
The commissioner found that "the election was held in conformance with 'general parliamentary procedure’, the election was not in contravention of the credit union act or the bylaws of the Ann Arbor Co-Op Credit Union, proper notice of the voting procedures was contained in the notice of the membership meeting and a greater member participation in the decision of this issue was engendered by these procedures”.
Further, as noted in the FIB staff recommendation for an order approving the amendment to the bylaws and certificate of organization, while the Michigan credit union act makes no provision for oral argument in such matters, the credit union’s request for oral argument was granted in the interest of fairness. However, as a condition of the granting of oral argument, the bureau required a copy of each complaint to be sent to the board of directors of the credit union, and that an affidavit be filed by June 17, 1981, with the bureau stating that the condition was met. No affidavit was filed.
Our review of the record causes us to support the commissioner’s findings with regard to the voting procedures.
In conclusion, this appeal is, as noted, brought pursuant to Const 1963, art 6, § 28, which provides in pertinent part:
"All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record.”
As noted previously, the decision to approve the bylaw amendment is not a case in which a hearing was required by the act. Review of the commissioner’s ruling does not indicate any abuse of discretion. Also, as previously noted, the statute provides for considerable exercise of discretion by the commissioner:
"The commissioner shall promulgate rules in addition to those specifically provided for by this act as he may deem necessary to effectuate the purposes and to execute and enforce the provisions of this act in accordance with and subject to Act No. 306 of the Public Acts of 1969, as amended, being sections 24.201 to 24.315 of the Michigan Compiled Laws.”
Consequently, we do not find any abuse of discretion or arbitrary action on the part of the commissioner.
Affirmed.
MCL 24.306(1); MSA 3.560(206X1).
MCL 490.5; MSA 23.485. The common bond provision is contained in § 5 of the statute, which was last amended by 1979 PA 90, § 1, effective August 1, 1979.
Membership in the Ann Arbor Co-Operative Society, Inc., required only payment of the membership fee. There was no common bond requirement, unless we consider that membership in the Ann Arbor Co-Operative Society, Inc., was an associational common bond.
See North Carolina Bankers Ass’n v North Carolina Credit Union Comm, 302 NC 458; 276 SE2d 404 (1981).
Webster’s New Collegiate Dictionary (G & C Merriam Co).
The punctuation of the statute leaves something to be desired. Attempts to diagram the sentence which reads: "[Cjredit union organization shall be limited to groups, of both large and small membership, having a common bond of occupaton or association, or to groups within a well-defined neighborhood, community, or rural district and one or more credit unions may be organized to serve those groups,” reveal an ambiguity.
Const 1963, art 6, § 28.
See fn 4 supra.
12 USC 1759.
Some members of the credit union, however, apparently did learn of the April 4, 1981, board meeting, as the Ann Arbor Co-Op Society sent a letter to the FIB on April 7, 1981, protesting the board’s actions.
67A CJS, Parliamentary Law, § 5, p 617, states:
"An adjourned meeting is legally the continuation of the meeting of which it is an adjournment. At such adjourned meeting the governing body can do any act which might have been done if no adjournment had taken place, and, conversely, the limitations imposed on the governing body as regards action at the original meeting obtain at the adjourned meeting, whether it is regular or special. Where a regular meeting is adjourned, any business which would have been proper to consider at that meeting may be considered and acted on at the adjourned meeting, and business proposed, but not included, at a regular meeting may be legally considered and determined by a deliberative body at an adjourned meeting.” (Footnotes omitted.)
Bannan v City of Saginaw, 120 Mich App 307, 324; 328 NW2d 35 (1982), lv gtd 418 Mich 880 (1983).
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Per Curiam.
Defendant Hartford Accident & Indemnity Company brings this appeal as of right from an order entered in the Cass County Circuit Court requiring contribution of 50% of a claim paid by plaintiff Hastings Mutual Insurance Ccimpany to James and Susan Reed.
The litigation below concerned a claim resulting from a fire which destroyed a house, an outbuilding, and personal property belonging to the Reeds. It is undisputed that the property was insured at the time of the fire by Hastings. The issue is whether Hartford was also on risk.
The Reeds dealt with Oliver Scott, an indepen dent insurance agent. Scott was an agent for both Hastings and Hartford. The Reeds obtained farm owners’ insurance through Scott from Hastings on January 7, 1976. From May of 1976 to May of 1979 the Reeds made eight claims on the policy. In June of 1979, Scott received a letter from Hastings stating the company’s intention to cancel the Reeds’ policy. Scott informed the Reeds of the situation and, on June 29, 1979, sent an application on their behalf for farm owners’ insurance to Hartford, requesting an effective date of July 1, 1979. Mr. Reed testified that Scott stated he was going to "put a 30-day binder on”. Scott could not recall exactly what he had told the Reeds about the binder, but his understanding was that the application to Hartford created a valid contract of insurance until such time as it was rejected by the company. No written binder for a 30-day period was ever executed.
On July 6, 1979, the Reeds received a formal notice of cancellation from Hastings, effective August 7, 1979. On July 26, Scott received a phone call from John Heyboer of Hartford, stating that his company did not wish to insure the Reeds’ property. Heyboer asked Scott if the Reeds were still covered by Hastings. When told that they were, he stated that he would not bill the agency for the binder, and that he considered that there had been no insurance in effect. When asked on cross- examination why he had inquired about the Hastings coverage, Heyboer stated that if the Reeds had not been covered, his company would have assumed the risk for a few days as a courtesy to Scott. This was Hartford’s custom in dealing with its agents. Scott did not inform the Reeds of Hartford’s rejection.
The fire occurred on July 30, 1979. Hastings paid the Reeds $47,046 and brought this action for contribution against Hartford, resulting in a judgment for $23,523, or 50% of the claim.
The first question which we must address is whether Scott’s statement to Reed that he would "put a 30-day binder on” effectively bound Hartford by contract for a period of 30 days from July 1, 1979. The Insurance Code of 1956 provides in § 2816, MCL 500.2816; MSA 24.12816, as follows:
"Binders or other contracts for temporary insurance may be made orally for 5 days or in writing for any further reasonable period, and shall be deemed to include all the terms of the Michigan standard policy and all such applicable endorsements, approved by the commissioner, as may be designated in such contract of temporary insurance; except that the cancellation clause of such Michigan standard policy, and the clause thereof specifying the hours of the day at which the insurance shall commence, may be superseded by the express terms of such contract of temporary insurance.”
It is undisputed that there was no written binder of insurance issued by Scott on behalf of Hartford. The trial court, however, quoting a portion of the exception to this provision, specifically that language stating: "except that the cancellation clause * * * may be superseded by the express terms of such contract of temporary insurance”, held that the five-day limitation for oral binders was a cancellation clause which had been superseded by the agreement between the Reeds and Scott.
In construing a statute, it is the obligation of the courts to discover and effectuate the intent of the Legislature. E.g., Melia v Employment Security Comm, 346 Mich 544, 562; 78 NW2d 273 (1956); Avon Twp v State Boundary Comm, 96 Mich App 736, 743; 293 NW2d 691 (1980). If possible, a statutory provision must be construed to give effect to every word used therein. Melia, supra; Deshler v Grigg, 90 Mich App 49, 53-54; 282 NW2d 237 (1979), lv den 407 Mich 875 (1979).
In our opinion, the trial court’s construction of the language which it relied upon is erroneous. Considered in full, it is clear that the provision in dispute merely allows the statutory term governing the cancellation of a Michigan standard policy of fire insurance to be varied by the express terms of the contract of temporary insurance.
Section 2832 of the Insurance Code of 1956, MCL 500.2832; MSA 24.12832, mandates the specific form of the standard fire policy to be used in Michigan. The cancellation clause to be included in a standard fire policy is contained in lines 56 through 67 of MCL 500.2832; MSA 24.12832. The trial court erred in failing to distinguish between the cancellation of an existing policy of insurance and the expiration of insurance by its own terms or by operation of law. See and compare, Wynn v Farmers Ins Group, 98 Mich App 93, 96-97; 296 NW2d 197 (1980), and cases cited therein.
Were we to accept the trial court’s construction of the exception to MCL 500.2816; MSA 24.12816, we would render that portion of the provision making oral binders for temporary insurance effective for only five days totally without force since every oral agreement to extend temporary cover age for more than five days would fall within the exception to the provision.
Hastings and the trial court also rely on a series of appellate decisions which hold that an insurance company will be bound by the actions of an agent to the extent that the agent had the apparent authority to act as he did or which note that the purpose of the Insurance Code is to protect policyholders or both. See, inter alia, Mundhenk v Liverpool & London & Globe Ins Co, Ltd, 311 Mich 571, 575; 19 NW2d 103 (1945); Wutzke v County Fire Ins Co of Philadelphia, 266 Mich 556, 561; 254 NW 203 (1934); Coverdill v Northern Ins Co of New York, 243 Mich 395, 397-398; 220 NW 758 (1928); Armstrong v Western Manufacturers’ Mutual Ins Co, 95 Mich 137, 139; 54 NW 637 (1893).
Although not always so expressed in these decisions, it is clear that each has its underpinning in the doctrine of equitable estoppel. When the elements necessary to establish estoppel are scrutinized, it is evident that Hastings is not entitled to the judgment rendered in its favor.
Estoppel arises where one by his acts, representations, or silence when he ought to speak, intentionally or through culpable negligence induces another to believe in the existence of certain facts and that person justifiably relies on the existence of the assumed facts to his detriment. See, eg., Holt v Stofflet, 338 Mich 115, 119; 61 NW2d 28 (1953); Johnson v Harper-Grace Hospital, 92 Mich App 202, 205; 284 NW2d 520 (1979). In this case, Hartford did nothing to induce any belief on the part of Hastings, and Hastings did not detrimentally rely on the existence of certain facts as a consequence of Hartford’s representations, actions, or silence. Hastings’s policy was issued years before Hartford ever became involved with the Reeds, and the record is devoid of any evidence of contacts between Hastings and Hartford in respect to the Reeds before the fire. Hastings was, by its admission, on risk for the incident which resulted in extensive fire damage to the Reeds’ property. This was the result of Hastings’s decision to issue the Reeds a fire insurance policy in January, 1976. Hartford did not induce Hastings to issue the policy nor to continue coverage by representing that it, too, had issued a policy to the Reeds. Since there was no detrimental reliance by Hastings, estoppel did not arise. See Larson v Van Horn, 110 Mich App 369, 380; 313 NW2d 288 (1981).
Because the fire occurred when there was not an effective contract of insurance issued by Hartford which protected the Reeds, and because Hastings was not induced by, nor had it relied upon, the actions of Hartford in issuing or continuing its effective policy of insurance covering the Reeds, the trial court’s decision must be reversed and judgment entered for Hartford. It is so ordered.
Reversed. No costs, a public question of first impression.
The statutorily mandated cancellation clause provides:
"This policy shall be cancelled at any time at the request of the insured, in which case this Company shall, upon demand and surrender of this policy, refund the excess of paid premium above the customary short rates for the expired time. This policy may be cancelled at any time by this Company by giving to the insured a five days’ written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that said excess premium (if not tendered) will be refunded on demand.”
In fact, estoppel is explicitly said to be the basis of the decisions in Mundhenk, supra, and Coverdill, supra. Cf., Industro Motive Corp v Morris Agency, Inc, 76 Mich App 390; 256 NW2d 607 (1977) (Insurer and agent held to be estopped to deny that policy protected the insured to the extent of the coverage which had been requested by the insured.). | [
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T. Gillespie, J.
ACCO Industries, Inc., which was formerly known as American Chain and Cable Company, is incorporated in New York, with its principal office in Connecticut. The company operated plants in Warren, Adrian, and Plymouth, Michigan. These operations rendered the company liable for Michigan’s single business tax, MCL 208.1 et seq.; MSA 7.558(1) et seq. A difference in the methods used by the company and the Michigan Department of Treasury to compute the labor intensive component of the tax caused the Treasury to issue deficiency assessments against ACCO for the years 1976 to 1979. ACCO filed a petition with the Michigan Tax Tribunal protesting the assessments. The Tax Tribunal entered judgment in favor of the Treasury. From that judgment ACCO appeals to this Court. We find the legislative intent as to the computation under § 31(5) of the Single Business Tax Act, which measures labor intensity, to coincide with the Treasury’s position and therefore affirm the decision of the Tax Tribunal.
A brief description of the single business tax is in order. The Michigan single business tax is unique to Michigan. It is a value added tax levied for the privilege of doing business in this state. The tax is an adaptation of a tax common in Western Europe. It does not tax profits, assets, or net worth. What is taxed is economic activity and growth. This is accomplished by taxing the increase in value of goods and services brought about by whatever is done to them between the time of purchase and sale.
A brief discussion of the tax may be found in Stockler v Dep’t of Treasury, 75 Mich App 640, 643; 255 NW2d 718 (1977), and Town & Country Dodge, Inc v Dep’t of Treasury, 118 Mich App 778, 786; 325 NW2d 577 (1982).
Briefly, the tax is imposed by determination of the nationwide or worldwide tax base of the company, which is computed by calculation of a number of complex factors defined in a formula set forth in MCL 208.9; MSA 7.558(9). The tax base is then "apportioned” by applying a set of computa tions set forth in MCL 208.40 to 208.69; MSA 7.558(40) to 7.558(69), to arrive at a "Michigan tax base”. After that calculation is completed, a labor intensive company may deduct another percentage computed in accordance with § 31(5), MCL 208.31(5); MSA 7.558(31)(5). It is the latter calculation which is here in issue.
The issue is the legislative intent when, in 1975, the act was passed.
At the times concerned in this appeal, § 31(5) read:
"In lieu of the adjustment provided in subsection (2) or (3) a person may elect to reduce the adjusted tax base by the percentage that compensation exceeds 65% of the total tax base. The deduction shall not exceed 35% of the adjusted tax base.” 1975 PA 228.
The term "total tax base” used in this short passage creates an ambiguity. The term does not appear elsewhere in the act. Elsewhere in the act the term "tax base” is used.
ACCO contends that by use of the term "total tax base” the Legislature meant the tax base after apportionment and allocations. ACCO computes the percentage deduction by dividing its worldwide compensation by its tax base after all apportionment, allocations, and adjustments.
The Treasury divides worldwide compensation by the worldwide tax base unallocated and unadjusted to arrive at the labor component.
The Treasury method obviously generates a lesser percentage for the deduction.
After this last step, a 2.35% tax is imposed.
The difference between the two methods of calculation resulted in the Treasury’s issuing a tax deficiency against ACCO in the amount of $201,- 455 for the years in question. If the ACCO method of calculation were adopted, the estimated loss of revenue to the Treasury would amount to approximately $150,000,000 for each of the years affected. The difference in calculation, though simple in statement, is significant in effect.
It is necessary to determine what the intent of the Legislature was when it passed the act.
First, we must look to the basic English meaning of the words employed.
ACCO’s contention would mean that we must find that "tax base” means less than "total tax base”. Basic English construction would support the proposition that the word "total” added to the words "tax base” means a tax base undiminished by apportionment or allocation. General Motors Corp v Erves (On Rehearing), 399 Mich 241, 253-255; 249 NW2d 41 (1976); Chrysler Corp v Washington, 52 Mich App 229; 217 NW2d 66 (1974).
We must next look to the expressed purpose of the legislation. The purpose was obviously to provide a tax advantage to labor intensive enterprises. The labor intensity of a Michigan business can be determined by a comparison of compensation paid in Michigan to its Michigan tax base. This does not, however, cover the expense of overhead and management which occurs elsewhere but is beneficial to the Michigan portion. The Treasury has seen fit to compare national or worldwide compensation with the national or worldwide tax base, which does provide a concept of the overall labor intensity of the enterprise.
ACCO’s method of comparing worldwide compensation with a Michigan tax base is illogical.
It is a rule of construction that a statute must be construed to avoid unreasonable consequences. Royal Oak School Dist v Schulman, 68 Mich App 589, 593; 243 NW2d 673 (1976); Shulevitz v Dep’t of Treasury, 78 Mich App 655, 658-659; 261 NW2d 31 (1977).
Most persuasive is the fact that the Legislature itself tells us its intention in the use of the word "total”. When it passed 1981 PA 208, the Legislature removed the word "total” from § 31(5) and made the following note as to its intent:
"Deletions of the word 'total’ made by this amendatory act in section 31 of the single business tax act, Act No. 281 of the Public Acts of 1975, as amended, being section 208.35 of the Michigan Compiled Laws, shall serve to cure and clarify any misinterpretation of the operation of section 31 since the effective date of Act No. 273 of the Public Acts of 1977. When originally enacted by Act No. 228 of the Public Acts of 1975, section 31 used the term 'total tax base’ to indicate that the exclusions made by section 9(4)(c) of the single business tax act of a portion of the depreciation, amortization, or immediate or accelerated write-off related to the cost of tangible assets should be added back to the tax base, before apportionment or allocation, for purposes of section 31. However when, by Act No. 273 of the Public Acts of 1977, section 9(4)(c) was amended to require that all depreciation, amortization, or immediate or accelerated write-off related to the cost of tangible assets be included in a person’s tax base, there became no difference between the 'tax base’ and 'total tax base’ of a person. The deletion of the word 'total’ by this amendatory act is an expression of the Legislature’s intent that the terms 'total tax base’ and 'tax base’ were, since the effective date of Act No. 273 of the Public Acts of 1977, to be considered synonymous and that its deletion by this amendatory act should be interpreted as a resolution of further misinterpretations.”
ACCO insists that 1981 PA 208 has no retroactive effect and can have no influence on this decision. We disagree. We believe the effect of a later statement of legislative intent by the Legislature on a disputed statute is binding on the Court.
There have been challenges in the circuit courts and the Court of Claims identical in form to this challenge mounted by ACCO. The rule is stated in Detroit Edison Co v Janosz, 350 Mich 606, 613-614; 87 NW2d 126 (1957), that in construing an amendment, if the meaning of the statute is settled, the amendment changes the statute amended. However, if varying interpretations of a statute create an uncertainty, then an amendment adopted for the purpose of making plain what the legislative intent had been all along from the time of the statute’s enactment, such amendment does have a retroactive effect. A recent reiteration of this rule is found in Production Credit Ass’n of Lansing v Dep’t of Treasury, 404 Mich 301, 318-319; 273 NW2d 10 (1978).
Lastly, the Treasury and the Legislature have utilized the computation formula urged by the Treasury in this suit since the effective date of the single business tax in 1976. The construction given by those charged with administering a statute should be given deference and that construction should not be overturned unless clearly wrong or another construction is plainly required. Lane v Dep’t of Corrections Parole Bd, 383 Mich 50; 173 NW2d 209 (1970); St Joseph Twp v State Boundary Comm, 101 Mich App 407, 414-415; 300 NW2d 578 (1980). Section 31(5) of the Single Business Tax Act was construed in Bechtel Power Corp v Dep’t of Treasury, 128 Mich App 324; 340 NW2d 297 (1983), and, in so doing, the panel recognized the above rule.
In respect to the Treasury’s cross-appeal, we find that the hearing officer did err in refusing to allow Mr. Richard Willits, an analyst with the Office of Revenue and Tax Analysis, to testify. Mr. Willits did have information on the views of the Legislature as to revenues to be produced by the tax which would be indicative of the Legislature’s view as to how the tax should be computed. This was, however, harmless error because of the decision rendered by the hearing officer.
The decision of the Tax Tribunal is affirmed. No costs to be taxed as a public question is involved. | [
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Murphy, P.J.
These consolidated cases were considered by this panel pursuant to Administrative Order No. 1994-4 to resolve a conflict between the reasoning of the original panels in these two cases and the decision in Listanski v Canton Charter Twp, 206 Mich App 356; 523 NW2d 229 (1994). The conflict concerns the liability of a township for injuries received by a pedestrian who falls on a sidewalk that is within the township and that is located along a county road.
In Williams v Redford Twp, the plaintiff claimed that the township was liable pursuant to the highway exception to governmental immunity, MCL 691.1402(1); MSA 3.996(102)(1), for a failure to reasonably maintain the sidewalk. The circuit court granted the township’s summary disposition motion on the ground that the township did not have a duty to maintain a sidewalk situated along a county road. The circuit court’s decision was consistent with this Court’s later decision in Listanski v Canton Twp, supra, in which a panel of this Court concluded that, in light of MCL 41.288(1); MSA 9.585(3X1), the Legislature had limited a township’s jurisdiction over sidewalks within its boundaries and there was no requirement that a township repair sidewalks adjacent to county or state roads. On appeal in Williams, a panel of this Court concluded that townships do have a duty to maintain sidewalks and that Listanski was wrongly decided, but the panel was constrained to affirm by Administrative Order No. 1994-4 because the decision in Listanski was a prior published decision.
In Moceri, as in Williams and Listanski, the plaintiff fell on a sidewalk within the township that was located along a road under county jurisdiction. The circuit court denied the defendant township’s motion for summary disposition. Upon leave granted, a panel of this Court reversed on the basis of Listanski, which the panel found controlling pursuant to Administrative Order No. 1994-4. The Moceri panel indicated that but for Listanski the panel would have affirmed and that the analysis in Williams v Redford Twp was persuasive.
This panel was convened to resolve the conflict between Listanski and Williams/Moceri. Pursuant to Administrative Order No. 1994-4, convening this panel also required that the initial opinions in Williams and Moceri be vacated. The order doing so and the vacated opinions in Williams and Moceri have been published beginning at 207 Mich App 801 (1994). Our review of the law and arguments in these cases leads us to the same conclusion reached by the prior panels of this Court in Williams and Moceri. As did the panel in Moceri, we find persuasive the reasoning and analysis of the Williams decision and hereby adopt that opinion as our own. Consequently, we hold that a township does have a duty to maintain sidewalks pursuant to MCL 691.1402(1); MSA 3.996(102X1) and MCL 691.1401(e); MSA 3.996(101)(e), even sidewalks along county or state roads. This duty was not diminished by the McNitt act, 1931 PA 130, MCL 247.1 et seq.; MSA 9.141 et seq., repealed by 1951 PA 151, which transferred responsibility for township roads from townships to counties.
Our conclusion is supported further by Const 1963, art 7, §29, which left control of township streets and public places under the control of townships, and by the first sentence of MCL 691.1402(1); MSA 3.996(102)(1), which provides that, among other things, townships are responsible for maintaining their sidewalks.
Additional support for our conclusion is found in language in Mason v Wayne Co Bd of Comm’rs, 447 Mich 130; 523 NW2d 791 (1994), and Chaney v Dep’t of Transportation, 447 Mich 145; 523 NW2d 762 (1994). Neither of these cases was directly concerned with the responsibility of a governmental entity for sidewalk maintenance. Nevertheless, the Court in Mason, in the course of discussing the scope of liability under MCL 691.1402(1); MSA 3.996(102)(1), noted the appearance of a legislative intent to allocate responsibility for sidewalks and crosswalks to local governments, including townships. 447 Mich 136, n 6. Similarly, in Chaney, Justice Boyle, in her concurring opinion, noted that the "duty to maintain and repair sidewalks and crosswalks falls on local governments, including cities, villages, and townships. . . .” 447 Mich 172, n 2. In his dissent in Chaney, Justice Levin discussed the development of liability for sidewalk maintenance, which liability historically has been placed upon townships and cities. See 447 Mich 201-203.
Our holding treats townships the same as cities with respect to sidewalks along roads or highways under the jurisdiction of another governmental unit. For example, in Jones v Ypsilanti, 26 Mich App 574; 182 NW2d 795 (1970), a city was found to have jurisdiction over a sidewalk constructed along a state trunk line. The analysis in Jones is not outdated. Williams v Redford Twp, 207 Mich App 808. There is no logical or legal reason to treat a township differently. Accordingly, we reject the holding in Court v Clark, 19 Mich App 261; 172 NW2d 545 (1969), where a township was found not to be liable for improper maintenance of a sidewalk. Court v Clark should not be considered good law. See Mason v Wayne Co Bd of Comm’rs, 447 Mich 136, n 6; Williams v Redford Twp, 207 Mich App 812, n 16.
The circuit court’s order of summary disposition in Williams v Redford Twp, Docket No. 154658, is reversed. The circuit court’s denial of summary disposition in Moceri v Canton Charter Twp, Docket No. 155596, is affirmed. Both cases are remanded for further proceedings. | [
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Mackenzie, P.J.
This case arises from a dispute over the amount of attorney fees due the attorney for the guardian of Roy L’Esperance, who was injured in an automobile accident on March 23, 1982. The car he was driving belonged to his foster brother and was insured by Auto-Owners Insurance Company. L’Esperance had no insurance coverage of his own. Due to his injuries he was hospitalized at Bronson Methodist Hospital and accrued large medical bills. The bills were paid after L’Esperance’s guardian, Nancy Dailey, had appellant Sloan, an attorney, file an application for no-fault automobile insurance benefits on May 18, 1982. The medical bills were submitted on June 2, 1982, and the insurer voluntarily began submitting drafts in payment thereof on June 14, 1982. Thereafter, appellant Sloan and Nancy Dailey, as L’Esperance’s guardian, entered into a contingent fee agreement on June 18, 1982, allowing appellant one-third of any benefits recovered. Sloan now claims that he is entitled to one-third of the total amount recovered due to his efforts in the case under the contingent fee agreement. Sloan was appointed the attorney for the estate by an order signed by Probate Judge Morley on June 22, 1982. After learning of Sloan’s intention to claim one-third of the PIP benefits, Bronson Methodist Hospital intervened in the matter as an interested party on the ground that, if Sloan’s claim was allowed, there would not be sufficient money left in the fund to reimburse the hospital for medical care provided to L’Esperance. Although attorney Kleidon is listed as an appellant in the claim of appeal, he has not filed a brief on appeal and no issues regarding attorney Kleidon are raised in attorney Sloan’s brief on appeal.
On October 5, 1982, Albert J. Neukom, Hillsdale County Probate Judge acting by assignment in St. Joseph County, found that the claim for uncontested PIP benefits was a separate and distinct action from certain contested PIP benefits and from a personal injury case and ruled that the time and effort spent by Sloan establishing the guardianship of L’Esperance and pursuing uncontested PIP benefits should be based on an hourly rate as opposed to a contingent fee. The judge ordered Sloan to submit a statement outlining the amount of fees claimed by Sloan for services rendered in procuring the uncontested benefits.
On November 22, 1982, the court held a hearing to determine the amount of fees due Sloan. Judge Neukom ruled that the amount of fees due Sloan for services rendered to the estate of L’Esperance was $2,062.50 rather than the $25,425 amount claimed by Sloan. In making its decision the court reiterated its ruling that the contingent fee agreement made between the guardian and Sloan should not be effective regarding the uncontested or promptly paid PIP benefits.
Attorney Kevin Kleidon testified that this matter began when the probate judge for St. Joseph County, John Morley, asked attorney Kleidon if he was willing to act as guardian ad litem for L’Esperance. Prior to the accident, L’Esperance had been living with the Keith and Nancy Dailey family. Kleidon spoke with Nancy Dailey and advised her that she should petition for guardianship and that he would act as her attorney. After the temporary guardianship arrangement had been made, Kleidon spoke with Nancy Dailey and discovered that L’Esperance’s injuries had resulted from an automobile accident. He then got a copy of the police report which indicated to him that there might be a third-party suit or a no-fault insurance case involved in the matter. At that point, Kleidon contacted appellant Sloan’s office and set up an appointment for Nancy Dailey to meet with Sloan regarding her legal rights.
Attorney Sloan testified that he first met with Nancy Dailey on May 6, 1982. During the meeting they discussed no-fault insurance benefit claims that could be filed on behalf of L’Esperance. Sloan did not inform Mrs. Dailey that she could file a claim for the PIP benefits herself without benefit of counsel or that his firm could bill her at an hourly rate rather than entering into a contingent fee arrangement. Sloan also did not discuss with Mrs. Dailey the difference between contested and uncontested no-fault insurance claims.
Appellant claims the probate court erred in determining attorney fees on the basis of reasonableness in terms of the skill, time, and labor involved rather than enforcing the contingent fee contract. We find no error.
It was within the authority of the probate court to make a ruling in the present matter because the court has been granted exclusive jurisdiction in the resolution of any contested matter with respect to its wards. MCL 700.21(d); MSA 27.5021(d). It was also within the court’s authority to hold a hearing on the amount of compensation due the attorney for the estate of L’Esperance since this power is granted by PCR 908.3. The rule states that, when an attorney’s compensation has not been consented to by all the parties affected or approved by the judge having jurisdiction over the estate, the attorney claiming the fee must append to an accounting, schedule, petition, or motion in which compensation is claimed a written description of services performed, a summary of the work done by the attorney, and other information that might be helpful to the court in determining compensation.
In the present case a hearing was held on November 22, 1982, to determine the compensation due attorney Sloan. On December 27, 1982, an order was issued granting Sloan’s law firm $2,062.50 as the fees due. and owing them for services rendered to the estate of L’Esperance rather than the one-third contingent fee they had originally requested. The standard of review applied by this Court to a probate court’s determination as to the amount of attorney fees to be awarded is whether the court abused its discretion. In re Estate of Weaver, 119 Mich App 796, 799; 327 NW2d 366 (1982).
The Michigan no-fault act contains no provision which promulgates guidelines for the payment of attorney fees in uncontested cases. Absent a legislative pronouncement on determination of reasonable fees, a court should adhere to the guidelines enumerated in Crawley v Schick, 48 Mich App 728, 737; 211 NW2d 217 (1973). The Court in Crawley stated:
"There is no precise formula for computing the reasonableness of an attorney’s fee. However, among the facts to be taken into consideration in determining the reasonableness of a fee include, but are not limited to, the following: (1) the professional standing and experience of the attorney; (2) the skill, time and labor involved; (3) the amount in question and the results achieved; (4) the difficulty of the case; (5) the expenses incurred; and (6) the nature and length of the professional relationship with the client. See generally 3 Michigan Law & Practice, Attorneys and Counselors, § 44, p 275 and Disciplinary Rule 2-106(B) of the Code of Professional Responsibility and Ethics.”
While a contingent fee agreement may be considered as one factor in determining the reasonableness of a fee, it is not by itself determinative. Liddell v Detroit Automobile Inter-Ins Exchange, 102 Mich App 636; 302 NW2d 260 (1981), lv den 411 Mich 1079 (1981).
During the hearing held on November 22, 1982, the court gave careful consideration to all of the applicable elements of the test set forth in Crawley, supra. In line with Liddell, supra, the court considered the contingent fee agreement as a factor in making his determination. The judge concentrated special attention on the skill, time, and labor involved, considering item by item the time that Sloan claimed he had devoted to this case. We find that the judge properly determined the amount of fees to which Sloan was entitled and did not abuse his discretion.
In making his case, Sloan primarily relies on Aetna Casualty & Surety Co v Starkey, 116 Mich App 640; 323 NW2d 325 (1982), lv den 417 Mich 929 (1983), for the proposition that he may assert a binding attorney’s lien on the no-fault medical benefits fund to the extent allowed by the contingent fee agreement between himself and the guardian.
The Starkey decision is distinguishable from the case at bar. Of primary importance is the fact that, in Starkey, the no-fault benefits due the defendant were overdue, as Aetna had refused to pay the claim on the ground that there was no causal relationship between defendant’s son’s ailment and the accident involved. The attorney for the defendant was required to allocate considerable time and effort to proving this causal relation ship and eventually was successful in doing so. The fact that the benefit payments were overdue also brought the case within MCL 500.3148(1); MSA 24.13148(1), which states in pertinent part: "An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue.” As we have already stated, the Michigan no-fault act contains no provision dealing with attorney fees in cases which are uncontested. The benefits in this case were not overdue and the only step that Sloan took toward procuring the benefits was the filing of a no-fault application with the insurance company. This is hardly comparable to the efforts put forth by the attorney in Starkey. The trial court recognized this distinguishing factor in its determination of the reasonableness of Sloan’s fee.
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Per Curiam.
On his plea of guilty, defendant was convicted of assaulting an employee of a place of confinement, MCL 750.197c; MSA 28.394(3). A plea bargain in the case resulted in the dismissal of two assault charges and dismissal of a fourth-felony offender charge. MCL 769.12; MSA 28.1084. Defendant appeals as of right.
On appeal, defendant claims that his conviction should be reversed because the trial judge misinformed him of the maximum sentence for the offense to which he was pleading. Defendant was told twice that the maximum sentence for his offense was five years; it is, in fact, four years. See MCL 750.503; MSA 28.771. Defendant was told that the sentence would run consecutively to the sentence he was serving at the time of the offense. He was sentenced to a consecutive term of two and one-half to four years in prison.
GCR 1963, 785.7(l)(b) requires a judge accepting a guilty plea to inform the defendant personally of the maximum possible prison sentence for the offense to which the plea is offered. A failure to impart the information concerning the maximum possible sentence generally requires reversal. Guilty Plea Cases, 395 Mich 96, 118; 235 NW2d 132 (1975).
The failure to advise a defendant pleading guilty of the maximum sentence which could be imposed should not be regarded as reversible error per se where there is a sentence bargain and the defendant has been sentenced in accordance with the bargain. People v Jackson, 417 Mich 243, 246; 334 NW2d 371 (1983).
In this case, the trial judge did n'ot fail to impart information concerning the maximum sentence, but informed the defendant that the maximum possible sentence was higher than it actually was. We do not regard such an error as coming within the per se rule requiring reversal adopted in Guilty Plea Cases, supra. Instead, this issue must be decided by applying the general rule that the nature of the noncompliance with the court rule determines whether reversal is required. See Guilty Plea Cases, supra, p 113, where it is stated as follows:
"Noncompliance with a requirement of Rule 785.7 may but does not necessarily require reversal.
"Whether a particular departure from Rule 785.7 justifies or requires reversal or remand for additional proceedings will depend on the nature of the noncompliance.”
The foregoing statement from Guilty Plea Cases, supra, has been cited in People v Rogers, 412 Mich 669, 671; 316 NW2d 701 (1982).
The decision in Jackson, supra, suggests that reversal is not required where no possibility exists that a defendant has been misled to his prejudice.
We believe that the error in informing the defendant that the maximum possible sentence was greater than it actually was does not require reversal. The rule requiring that a judge inform a defendant of the maximum possible sentence for the offense to which he is pleading was intended to inform the defendant of the most serious consequences he faces if he pleads guilty. This purpose was fully served in the present case, despite the fact that defendant was misinformed as to the maximum penalty.
Misinformation concerning a maximum possible sentence could mislead a defendant to his prejudice if he is informed that the maximum is less than it actually is. We conclude, however, that defendant was not misled to his prejudice. Reversal is not, therefore, required.
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Per Curiam.
Defendant originally was charged with jail escape, MCL 750.197(2); MSA 28.394(2), and forgery, MCL 750.248; MSA 28.445. The escape charge was subsequently dismissed, and defendant pleaded guilty of attempted forgery, MCL 750.92; MSA 28.287. He was sentenced to 2ti to 5 years’ imprisonment and now appeals as of right. We affirm.
The underlying facts are undisputed. Defendant escaped from the Kent County Jail, where he was housed awaiting sentencing on a federal bank robbery conviction. Defendant accomplished the escape by assuming the identity of his cellmate, who was then about to be released on bond, and forging a signature on the cellmate’s state bail-bond form. He pleaded guilty of federal escape charges, 18 USC 751(a), and on July 17, 1992, was sentenced in federal district court to fifty months’ incarceration. On July 27, 1992, defendant was charged with escape and forgery under Michigan law. The trial court granted defendant’s motion to dismiss the Michigan escape charge on the ground of double jeopardy, but declined to dismiss the Michigan forgery charge. The parties agree that the federal government could not have brought forgery charges, apparently because a state bail bond was involved.
The sole issue on appeal is whether defendant’s Michigan forgery conviction was barred by the Double Jeopardy Clause of the Michigan Constitution, Const 1963, art 1, § 15, or was permissible under the dual-sovereignty doctrine. That doctrine, as originally set forth in Abbate v United States, 359 US 187; 79 S Ct 666; 3 L Ed 2d 729 (1959), and Bartkus v Illinois, 359 US 121; 79 S Ct 676; 3 L Ed 2d 684 (1959), allows successive prosecutions by the state and federal governments for the same act. The parties agree that the controlling guidelines for resolving the question were established by our Supreme Court in People v Cooper, 398 Mich 450; 247 NW2d 866 (1976). Cooper was explained by the Court in People v Gay, 407 Mich 681, 693-695; 289 NW2d 651 (1980):
This Court broke with Federal precedent and held in People v Cooper that limitations did exist under the Michigan Constitution upon the state’s ability to prosecute a defendant in a state court following a conviction in Federal court for crimes arising out of the same acts. 389 Mich 457, 460-461. We recognized in Cooper that state criminal justice systems must retain their strength and independence. This principle of dual sovereignty has long maintained ascendance in the American system of justice. ...
However, we found that emerging Federal trends in recent years and the dictates of our own Constitution required us to impose limits on what dual sovereignty would permit. We held that where a criminal act involves the legitimate interests of both the state and Federal governments and the Federal criminal prosecution cannot adequately represent the state’s independent interests, then the state in those rare instances is justified in protecting its interest by prosecuting the defendant, even after conviction or acquittal in Federal court. 398 Mich 459-460. Dual prosecution of these differing interests violates neither the Federal nor Michigan Constitution. . . .
On the other hand, this Court also recognized the fundamental need to safeguard defendants’ constitutional rights. We therefore prohibited dual prosecution where the interests of the state are not "substantially different.” People v Cooper, supra, 461. . . .
Cooper represents a strong and uncompromising statement by this Court that a defendant’s right not to be twice tried in Federal and State court for the same criminal act will be jealously guarded except in extreme cases where Federal laws are framed to protect substantially different social interests. 398 Mich 459. Cooper makes clear that as a firm rule dual prosecution ordinarily will not be tolerated in Michigan. It is only in the rare instance where the social interests of the state are not addressed in substance by the Federal statute that a second prosecution will be allowed.
To assist courts in determining whether a former federal prosecution satisfies the state’s interest, the Cooper Court suggested three guidelines: (1) whether the maximum penalties of the two jurisdictions’ statutes are greatly disparate, (2) whether some reason exists why one jurisdiction cannot be entrusted to vindicate fully the other jurisdiction’s interests in securing a conviction, and (3) whether the differences in the statutes are substantive, as well as jurisdictional. 398 Mich 461. See also People v Formicola, 407 Mich 293, 298; 284 NW2d 334 (1979); People v Morillo, 90 Mich App 655, 660-665; 282 NW2d 434 (1979); People v Tyler, 100 Mich App 782, 788-790; 300 NW2d 411 (1980); People v Bero, 168 Mich App 545, 558-559; 425 NW2d 138 (1988); People v Mezy, 208 Mich App 545; 528 NW2d 783 (1995).
Examination of the second and third factors in the context of this case leads to the conclusion that the interests being protected by the State of Michigan in securing defendant’s forgery conviction are substantially different from the federal government’s interests in obtaining his escape conviction. In this regard, it is useful to compare the state and federal statutes at issue. See Formicola, supra, pp 299-300. The federal escape statute, 18 USC 751(a), provides in relevant part:
Whoever escapes or attempts to escape from the custody of the Attorney General or his authorized representative, or from any institution or facility in which he is confined by direction of the Attorney General . . . shall, if the custody or confinement is by virtue of an arrest on a charge of felony, or conviction of any offense, be fined not more than $5,000 or imprisoned not more than five years, or both ....
The Michigan forgery statute, MCL 750.248; MSA 28.445, provides:
Any person who shall falsely make, alter, forge, or counterfeit any . . . bond . . . with intent to injure or defraud any person, shall be guilty of a felony, punishable by imprisonment for not more that 14 years.
Clearly, these statutes are substantively different. The escape statute is designed to protect the federal government’s interest in preventing in mates from absenting themselves from custody without permission. The forgery statute, on the other hand, addresses the state’s interest in preventing any person from defrauding another by means of a false instrument.
Moreover, defendant’s federal escape conviction does not vindicate the state’s interest in securing a forgery conviction. Under the federal escape statute, the means used to accomplish the escape— here, forgery — are wholly immaterial. The escape conviction thus does not protect the state’s interest in preventing fraudulent instruments. Further, this is not a case where the federal government could have taken steps to protect the state’s interest but failed to do so; federal prosecution for forgery of the state bond was impossible.
Because the federal and state interests at issue in this case are "substantially different,” Cooper, supra, Const 1963, art 1, § 15 does not prohibit defendant’s Michigan prosecution for forgery after his federal prosecution for escape. Instead, under the dual-sovereignty doctrine, as qualified by Cooper, defendant’s state court prosecution was permitted.
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Per Curiam.
Defendants appeal by leave granted from the orders of the Wayne Circuit Court which denied their motions to compel production of medical records concerning Katie and Kimberly Dierickx and to compel these children to submit to a physical examination.
This is a medical malpractice suit arising from the birth of plaintiff Deanna Dierickx at defendant Cottage Hospital on May 20, 1980. The delivery was performed by defendant Charles B. Riddle, M.D. Deanna’s parents, Barbara and George Dierickx, have alleged other injuries to themselves for which they seek damages. Plaintiffs have alleged that Deanna has failed to develop normally and has suffered central nervous system damage, including cerebral palsy, psychomotor retardation, severe mental retardation, and seizure disorder as a proximate result of defendants’ negligence and malpractice. Plaintiffs filed this action in May of 1982.
On June 22, 1981, plaintiffs had a second daughter, Katie, a normal, healthy child. On October 3, 1983, during discovery in this case, the Dierickxes had a third child, Kimberly.
At her April 2, 1984, deposition, plaintiff Barbara Dierickx testified that Kimberly began exhibiting neurological abnormalities and problems with vision shortly after birth. She further testified that Kimberly had been hospitalized on at least six different occasions in the first six months of her life in an effort by the Dierickxes to determine the etiology of her medical problems. Defendants obtained certain medical records concerning Kimberly through an error of the copy service. These records indicate that Deanna’s condition is shared by Kimberly and that the treating physicians suspect a genetic disorder.
In an effort to fully explore a genetic causation defense theory, defendants moved to compel the production of the medical records of Katie and Kimberly. After a hearing on August 14, 1984, the trial court denied the motion, ruling that the physician-patient privilege was personal to these children and had not been waived. Defendants then moved to compel Katie and Kimberly to submit to a physical examination. After a hearing on August 31, 1984, the trial court denied the motion, apparently ruling that the physician-patient privilege shielded the children from this type of discovery. Orders denying each motion were entered September 18, 1984.
The production of documents in pretrial discovery is governed by GCR 1963, 310.1, which provides in relevant part:
After commencement of an action the judge of the court in which the action is pending may, upon motion of any party and upon notice to all other parties, and subject to the provisions of subrule 306.2:
(1) order any party to produce and permit the inspection and copying or photographing, by or on behalf of the moving party, of any reasonably designated documents, papers, books, accounts, letters, photographs, objects, or tangible things, not privileged, relevant to the subject matter involved in the pending action and which are in his possession, custody, or control. . . . [Emphasis added.]
By the terms of the rule, a trial court has discretion to order a party to produce relevant and nonprivileged documents.
The physician-patient privilege is set out in MCL 600.2157; MSA 27A.2157, which provides in relevant part:
No person duly authorized to practice medicine or surgery shall be allowed to disclose any information which he may have acquired in attending any patient in his professional character, and which information was necessary to enable him to prescribe for such patient as a physician, or to do any act for him as a surgeon: Provided, however, That in case such patient shall bring an action against any defendant to recover for any personal injuries, or for any malpractice, if such plaintiff shall produce any physician as a witness in his own behalf, who has treated him for such injury, or for any disease or condition, with reference to which such malpractice is alleged, he shall be deemed to have waived the privilege hereinbefore provided for, as to any or all other physicians, who may have treated him for such injuries, disease or condition ....
The purpose of the physician-patient privilege is to enable persons to secure medical aid without betrayal of confidence. Grand Rapids & Indiana R Co v Martin, 41 Mich 667, 671; 3 NW 173 (1879).
Defendants seek production of the medical records of Katie and Kimberly which would include information acquired by a physician in attending a patient in a professional capacity and necessary to enable that physician to prescribe for the patient. Thus, the requested medical records come within the express terms of the statutory privilege. Being privileged documents, they are not subject to discovery under GCR 1963, 310.1. However, defendants attempt to bring this case within the statute’s waiver provision, e.g., a malpractice action brought by a plaintiff-patient. Defendants argue that by bringing this action plaintiffs have placed the physical condition of the family at issue, thereby waiving their right to assert the physician-patient privilege on behalf of family members. We disagree.
The right to assert the physician-patient privilege is personal to the patient. Gaertner v Michigan, 385 Mich 49, 53; 187 NW2d 429 (1971); Storrs v Scougale, 48 Mich 387, 395; 12 NW 502 (1882). Although Katie and Kimberly are related to plaintiffs, they are not parties to this action. The existence of a genetic defect may be an issue in this litigation, but Katie and Kimberly (or their representatives) have not placed the health of Katie and Kimberly in controversy. Thus, they have not waived the privilege.
Further, plaintiffs have not implicitly waived the statutory privilege as to Katie and Kimberly by bringing this lawsuit. In Kelly v Allegan Circuit Judge, 382 Mich 425, 427; 169 NW2d 916 (1969), the Supreme Court noted that "[t]he statute describes only one circumstance wherein a plaintiff shall be 'deemed’ to have waived the privilege and that is when the plaintiff 'shall produce any physician as a witness in his own behalf in a suit for personal injuries or malpractice. ” (Emphasis as originally supplied.) The Court also observed that "a true waiver is an intentional, voluntary act and cannot arise by implication.” Id. We accept the Court’s statements as representing the correct view of the statute and conclude that the waiver provision does not obtain.
In Gaertner v Michigan, supra, the Supreme Court held that a guardian may legally act for his mentally incompetent ward, a minor, and may obtain access to the ward’s medical records by executing a waiver without violating the statutory privilege. Id., p 54. By analogy, a parent holds the right to assert the physician-patient privilege on behalf of his or her minor child. Thus, plaintiff Barbara Dierickx may properly assert the statutory privilege on behalf of Katie and Kimberly, while waiving the privilege as to Deanna.
Defendants also contend that the physician-patient privilege is not absolute where it is asserted solely to gain strategic advantage and to conceal evidence likely to establish the truth. Defendants rely upon the dicta of People v Lobaito, 133 Mich App 547, 562; 351 NW2d 233 (1984), in which it was determined that the physician-patient privilege statute did not apply, and Seaton v State Farm Life Ins Co, 99 Mich App 587; 299 NW2d 6 (1980), a case readily distinguishable from the one here and which does not support defendants’ posi tion. The physician-patient privilege has been characterized as "an absolute bar” which prohibits a physician from disclosing even the names of patients who are not involved in litigation. Schechet v Kesten, 372 Mich 346, 351; 126 NW2d 718 (1964). We conclude that the force of the statutory privilege outweighs defendants’ concern over plaintiffs’ use of it to gain a strategic advantage.
In short, although the requested medical records may be relevant to defendants’ theory of a genetically transmitted defect, the records are privileged and not subject to discovery.
Defendants next claim that the trial court erred by denying the request to compel a physical examination of Katie and Kimberly.
GCR 1963, 311.1 governs a request to compel a physical examination and provides:
In an action in which the mental or physical condition or the blood relationship of a party, or of an agent or a person in the custody or under the legal control of a party, is in controversy, the court in which the action is pending may order the party to submit to a physical or mental or blood examination by a physician or to produce for such examination his agent or the person in his custody or legal control. The order may be made only for good cause shown and upon notice to the person to be examined and to all parties and shall specify the time, place, manner, conditions, and scope of the examination, the person or persons by whom it is to be made, and shall provide that the attorney for the person to be examined may be present at the examination.
This Court reviews a trial court’s denial of a request for an order requiring a physical examination for an abuse of discretion. Brewster v Martin Marietta Aluminum Sales, Inc, 107 Mich App 639, 643; 309 NW2d 687 (1981).
Although the physician-patient privilege is not controlling, contrary to the trial court’s ruling, we agree with the trial court that defendants are not entitled to an order compelling the physical examination of Katie and Kimberly. This result is warranted by the language of the court rule. The physical condition, the mental condition, and the blood relationship of Katie and Kimberly are not "in controversy” in this lawsuit. Instead, the health of Deanna and her parents is "in controversy.”
Additional support for this view is found in FR Civ P 35, the comparable provision of federal civil procedure on which GCR 1963, 311 is modeled. Brewster v Martin Marietta, Inc, supra. The notes of the advisory committee on the 1970 amendment to FR Civ P 35(a) state that "[t]he amendment will settle beyond doubt that a parent or guardian suing to recover for injuries to a minor may be ordered to produce the minor for examination.” The drafters of the rule did not contemplate a situation in which the examination of a minor nonparty sibling would be requested. Thus, we affirm the trial court’s decision even though it was reached for the wrong reason. Peninsular Construction Co v Murray, 365 Mich 694, 699; 114 NW2d 202 (1962); Durbin v K-K-M Corp, 54 Mich App 38, 46; 220 NW2d 110 (1974), lv den 394 Mich 789 (1975).
Affirmed.
In a malpractice action, the Supreme Court of Missouri has held that the search for truth may require the disclosure of redacted medical records of nonparty patients even though the unedited records are protected by the physician-patient privilege, § 491.060(5). State ex rel Lester E Cox Medical Center v Keet, 678 SW2d 813 (Mo, 1984). This is a minority view. | [
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Per Curiam.
Plaintiff appeals as of right from an order which denied both his motion to amend pleadings and his motion for a rehearing of a prior order denying a writ of mandamus.
On November 6, 1984, a general election was held in this state. Marco Santia, plaintiff, and incumbent Mary McDevitt ran for the office of 39th District judge in the cities of Roseville and Fraser. Judge McDevitt received 11,890 votes in the election; plaintiff received 7,638 votes. Thereafter, on November 12, 1984, plaintiff by letter requested a recount of the votes, claiming that the votes received by each candidate were transposed because of computer error. Plaintiff enclosed a check covering the cost of the recount. Plaintiff’s letter was received on November 27, 1984. Apparently, the Secretary of State deposited plaintiff’s check on November 28, 1984.
On December 11, 1984, the Secretary of State sent plaintiff a letter denying his request for a recount, stating it was untimely filed. The letter explained that, relying on an Attorney General’s opinion, OAG, 1951-1952, No 1330, p 123 (November 27, 1950), plaintiff’s recount request was prematurely filed on November 27, 1984, one day before the Board of State Canvassers certified the results of the election. (Certification occurred November 28, 1984.) The Secretary of State returned plaintiff’s $270.
On December 17, 1985, plaintiff filed a complaint seeking a writ of mandamus and also seeking a temporary injunction, asking that the election ballots be preserved. On that same date, the circuit court issued an order to show cause against defendant. On January 9, 1985, the court granted plaintiff’s request for a preliminary injunction and ordered the preservation of the election ballots.
On January 17, 1985, the court entered an opinion denying plaintiff’s request for mandamus, holding that plaintiff’s request for a recount, filed on November 27, 1984, one day before the results of the election were certified by the Board of State Canvassers, did not have to be processed by the Secretary of State.
On February 21, 1985, plaintiff moved for a rehearing and for permission to amend his pleadings to include a request for a declaratory judg ment, claiming that defendant’s failure to provide him with personal notice of defendant’s completion of the canvass denied him due process. The motion was denied. The court held that allowing plaintiffs amendment would prejudice Ms. McDevitt and the public in that the authority of Ms. McDevitt’s decisions and the validity of her ability to even hold office would remain in question. At that same hearing, the City of Roseville (hereinafter intervenor) moved to intervene. MCR 2.209. On April 3, 1985, an order was entered allowing the intervention for the limited purpose of obtaining an order to clear its voting machines. On that same date, it was ordered that the ballots and punch card booklets from the contested election be preserved, but that the punch card voting machines be cleared.
MCL 168.879; MSA 6.1879 provides in pertinent part as follows:
(1) A candidate voted for at an election for an office may petition for a recount of the votes pursuant to the following requirements:
(c) The petition for a recount shall be fíled not later than 48 hours following the completion of the canvass of votes cast at an election. [Emphasis added.]
Although canvassing occurs at three different points in the election process, the parties in this case agree that "the canvass” referred to in MCL 168.879(c); MSA 6.1879(c) is the canvass performed by the Board of State Canvassers. The parties disagree as to the meaning of the words "not later than 48 hours following the completion of the canvass.” We find that the statute on its face sets only an outside time limit upon which the recount petition may be filed.
In construing statutory provisions, this Court has held:
[I]f the statute is unambiguous on its face, we will avoid further interpretation or construction of its terms. Detroit v Redford Twp, 253 Mich 453; 235 NW 217 (1931). However, if ambiguity exists, it is our duty to give effect to the intention of the Legislature in enacting the statute. Melia v Employment Security Comm, 346 Mich 544; 78 NW2d 273 (1956). To resolve a perceived ambiguity, a court will look to the object of the statute, the evil or mischief which it is designed to remedy, and will apply a reasonable construction which best accomplishes the statute’s purpose. Bennetts v State Employees Retirement Board, 95 Mich App 616; 291 NW2d 147 (1980); Stover v Retirement Board of St Clair Shores, 78 Mich App 409; 260 NW2d 112 (1977). Also, ambiguous statutes will be interpreted as a whole and construed so as to give effect to each provision and to produce an harmonious and consistent result. In re Petition of State Highway Comm, 383 Mich 709; 178 NW2d 923 (1970); People v Miller, 78 Mich App 336; 259 NW2d 877 (1977). Further, specific words in a given statute will be assigned their ordinary meaning unless a different interpretation is indicated. Oshtemo Twp v Kalamazoo, 77 Mich App 33, 39; 257 NW2d 260 (1977); MCL 8.3a; MSA 2.212(1). [Pittsfield Twp v City of Saline, 103 Mich App 99, 104-105; 302 NW2d 608 (1981).]
See, also, Melia v Employment Security Comm, 346 Mich 544, 562-563; 78 NW2d 273 (1956); Sneath v Popiolek, 135 Mich App 17, 23; 352 NW2d 331 (1984); R & T Sheet Metal, Inc v Hospitality Motor Inns, Inc, 139 Mich App 249, 253-254; 361 NW2d 785 (1984), lv den 422 Mich 944 (1985); People v Parsons, 142 Mich App 751, 756; 371 NW2d 440 (1985); Winiecki v Wolf, 147 Mich App 742, 744-745; 383 NW2d 119 (1985).
Furthermore, this Court has stated:
Public policy requires that statutes controlling the manner in which elections are conducted be construed as far as possible in a way which prevents the disenfranchisement of voters through the fraud or mistake of others. Lindstrom v Board of Canvassers of Manistee County, 94 Mich 467, 469; 54 NW 280 (1893); Groesbeck v Board of State Canvassers, 251 Mich 286, 291-292; 232 NW 387 (1930). Therefore, we must not construe the statute to impose technical requirements preventing a recount unless such a construction is clearly required by the language the Legislature employed. [Kennedy v Board of State Canvassers, 127 Mich App 493, 496-497; 339 NW2d 477 (1983).]
Rather than just setting an outside time limit, the Legislature could have instead required a recount petition to be filed only after the Board of State Canvassers had completed its canvass and within forty-eight hours therefrom. In drafting the quoted statute, the Legislature did not employ such an express requirement and this Court should not read one in. Kennedy, supra.
In pursuing his remedies, plaintiff properly petitioned for a writ of mandamus. MCL 168.878; MSA 6.1878. Pursuant to our interpretation of MCL 168.879(c); MSA 6.1879(c), plaintiffs petition was improperly denied because defendant had a duty to conduct a recount. To the extent that the stated Attorney General opinion conflicts with this holding, we disagree with its construction of the statute and further note that the opinions of the Attorney General lack precedential value. David Walcott Kendall Memorial School v City of Grand Rapids, 11 Mich App 231, 237; 160 NW2d 778 (1968), lv den 381 Mich 765 (1968); Chapman v Peoples Community Hospital Authority of Michigan, 139 Mich App 696, 702; 362 NW2d 755 (1984).
Due to our finding, we find it unnecessary to address plaintiff’s contention that the trial court abused its discretion in denying plaintiff’s motion to amend.
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Per Curiam.
Plaintiffs appeal as of right an order of the circuit court which granted defendants’ motion for accelerated judgment on the basis that plaintiffs’ claims were barred by the running of the statutory period of limitation._
On April 18, 1977, plaintiff Nancy Belleville was injured at the Shape-Up Shoppe, Inc., a fitness center. A lawsuit was filed against the corporation on March 19, 1980, and plaintiff and her husband obtained a judgment for $22,434.01. On March 31, 1983, defendant Robert Hanby, as president of the Shape-Up Shoppe, filed a Chapter 7 bankruptcy petition on behalf of the corporation. At the time, the single largest indebtedness of the corporation was the Bellevilles’ judgment. On July 27, 1983, the Bellevilles conducted a creditor’s examination of Robert Hanby pursuant to federal bankruptcy court rules. According to plaintiffs, the examination disclosed that there was a complete identity of interest between the Shape-Up Shoppe and its stockholders, defendants Hanby and Carol Stivers.
Plaintiffs filed the instant action on September 13, 1983, through which they sought to impose the Shape-Up Shoppe’s liability on the personal injury judgment upon defendants Hanby and Stivers. Count I alleged that the defendants ignored the formalities of corporate existence, thus merging the identities of the corporation and the defendants. Count II alleged that defendants failed to pay consideration for their stock in the corporation and as a result are personally liable to plaintiffs, as creditors of the corporation, for the full amount of the judgment rendered against the corporation.
On February 15, 1985, defendant Hanby moved for accelerated judgment pursuant to GCR 1963, 116.1(5) on the basis that plaintiffs’ claims were barred by the three-year period of limitation applicable to personal injury actions. Defendant Stivers was sometime thereafter allowed to join in the motion. By written order dated March 27, 1985, the trial court rejected plaintiffs’ argument that the ten-year period of limitation governing the enforcement of judgments was applicable and, thus, granted the motion for accelerated judgment.
The question presented through this appeal, then, is whether the statute of limitation which governs plaintiffs’ cause of action is MCL 600.5805(8); MSA 27A.5805(8), which prescribes a period of three years after the injury to recover damages for a personal injury, or MCL 600.5809(3); MSA 27A.5809(3), which sets a ten-year period of limitation for actions founded upon judgments from the time the judgment was rendered. In determining which limitation period controls, the focus must be on the type of interest allegedly harmed. Barnard v Dilley, 134 Mich App 375, 378; 350 NW2d 887 (1984). The gravamen of an action is determined by reading the claim as a whole. Adkins v Annapolis Hospital, 116 Mich App 558; 323 NW2d 482 (1982), aff'd 420 Mich 87; 360 NW2d 150 (1984). Further, this Court will look beyond procedural labels to see exactly what a party’s complaint is before deciding whether- it should be barred. Stringer v Bd of Trustees of Edward W Sparrow Hospital, 62 Mich App 696; 233 NW2d 698 (1975).
Although this case presents a question of first impression in Michigan, a federal court was recently presented with a similar issue in Wm Passalacqua Builders, Inc v Resnick Developers South, Inc, 608 F Supp 1261 (SD NY, 1985), reh den 611 F Supp 281 (SD NY, 1985). In Passalacqua, the plaintiffs obtained a creditor’s judgment against Res-nick Developers South, Inc. Subsequently, the plaintiffs filed suit against the judgment debtor corporation and its individual owners for satisfaction of the judgment. Plaintiffs sought to impose liability upon the individual owners for the judgment obtained against the debtor corporation by relying upon a theory of piercing the corporate veil. The individual owners moved for summary judgment, characterizing plaintiffs’ complaint as one alleging fraud, thus bringing into application the six-year statute of limitation for fraud actions. The district court, however, agreed with plaintiffs that they were merely attempting to enforce a judgment against the individual owners who controlled the judgment debtor corporation by relying upon a "piercing the corporate veil” theory. The court distinguished a case cited by the individual owners, Conklin v Furman, 48 NY 527 (1872), with the following reasoning:
Conklin, however, did not involve piercing the corporate veil. The case involved a statutory right to sue the stockholders for any balance remaining after the property of the corporation has been levied upon. The cause of action was established against the shareholders as shareholders and not as the alter ego or instrumentality of the corporation. This is a significant difference. Under the alter ego and instrumentality theories the corporation and those who have controlled the corporation are treated as but one entity. Fisser v International Bank, 282 F2d 231, 234 (CA 2, 1960). Thus, the statute of limitations applicable to the corporation should apply to those who are using the corporation as an instrumentality. The action accrued against both the corporation and any alter egos when the judgment was entered. [608 F Supp 1264.]
The Passalacqua court thus concluded that the statute of limitation relating to the enforcement of a judgment was applicable. See also Caxton Printers, Ltd v Ulen, 59 Idaho 688; 86 P2d 468 (1939).
We believe the reasoning of Passalacqua should be applied to the instant case. The lawsuit filed by the plaintiffs against defendants Hanby and Stivers was not one principally geared to establishing a right to recover for a personal injury. Rather, having already obtained a judgment against the corporation on their personal injury claim, plaintiffs sought, through the lawsuit at issue here, to establish that the judgment obtained against the corporation was also a judgment against the defendants in their individual capacities. The only issues presented in this cause of action are those concerned with piercing the corporate veil and establishing that defendants were the alter egos of the corporation. At no time did plaintiffs raise the issue typically associated with a personal injury claim, i.e., that plaintiff received an injury as a result of some negligent act or omission of the defendants. Thus, in its most basic sense, this was an action to establish an identity of interest between these defendants and the Shape-Up Shoppe. Viewed in this light, we believe the applicable statute of limitation is MCL 600.5809(3); MSA 27A.5809(3), i.e., ten years from the time of rendition of the judgment. Since the instant suit was filed well within the ten-year period, the trial court erred in granting defendants’ motion for accelerated judgment.
Reversed. | [
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Per Curiam.
Defendant, City of Pontiac, appeals as of right from the trial court’s denial of its motion for actual costs, including attorney fees, and denial of its motion for reconsideration and clarification. We reverse and remand for a determination of costs and attorney fees._
I
The underlying action was commenced in 1977 and involved a complaint for contract nonperformance. The case was submitted to mediation on December 19, 1980. Both parties rejected the mediation award of $350,000 to plaintiff. Following a bench trial, the trial court found no cause of action for plaintiff, Giannetti Brothers Construction Company, Inc., and entered judgment in defendant’s favor on October 13, 1982. The judgment also awarded defendant "costs and attorney fees as provided by law.”
Plaintiff appealed to this Court on November 5, 1982. This Court affirmed in an unpublished per curiam opinion on April 5, 1984. Defendant then began what it has described as the "arduous task of gathering the substantial body of data necessary to support and substantiate” its request for actual costs, pursuant to GCR 1963, 316.7(b)(3).
On May 30, 1984, defendant moved for approval of its bill of costs, totaling $101,340.04, some nineteen months after the judgment and fifty-five days after this Court’s opinion. Defendant amended its bill of costs on June 22, 1984, to request a total of $125,333.29. A controversy ensued. Plaintiff, insisting that defendant’s motion was untimely, requested that the trial court bifurcate the proceeding into a hearing on the issue of defendant’s entitlement to costs and an evidentiary hearing on the amount.
At arguments held on December 5, 1984, plaintiff urged that defendant had failed to follow the procedure for taxing costs specified in GCR 1963, 526.10(2). Specifically, defendant did not present its bill of costs within thirty days of the initial judgment as required by that rule. Plaintiff concluded that defendant had thereby waived any right to mediation sanctions. The trial court, agreeing with plaintiff that thirty days is the time limit for presenting a bill of costs, denied defendant’s motion to approve costs as being untimely.
Defendant moved on January 4, 1985, for reconsideration and clarification. Defendant requested that the trial court clarify whether it was referring to the nineteen-month interval between the initial judgment and defendant’s motion for costs, or the fifty-five-day interval between this Court’s opinion and defendant’s motion, when it denied the motion as untimely. Defense counsel also asked if the court was referring to GCR 1963, 526.10(2). The court denied defendant’s motion for reconsideration and clarification, ruling only that a thirty-day time period for filing a bill of costs was reasonable.
II
Defendant’s first claim on appeal is that GCR 1963, 526.10 does not govern the imposition of actual costs after a mediation evaluation has been rejected. Plaintiff counters that the thirty-day time limit specified in GCR 1963, 526.10 applies where costs are imposed after a mediation evaluation has been rejected.
Resolution of this issue requires us to determine whether the time limit for imposition of actual costs awarded pursuant to GCR 1963, 316.8 ought to be governed by GCR 1963, 526.10(2). At the outset of our analysis, we review the pertinent statutes and court rules governing costs. Chapter 24 of the Revised Judicature Act (rja) governs costs. MCL 600.2401; MSA 27A.2401 provides that the Supreme Court must promulgate rules to regulate the taxation of costs:
Except as otherwise provided by statute, the supreme court shall by rule regulate the taxation of costs. When costs are allowed in any action or proceeding in the supreme court, the circuit court or the district court the items and amount thereof shall be governed by this chapter except as otherwise provided in this act.
MCL 600.2405; MSA 27A.2405 specifies the items taxable as costs, and provides in pertinent part:
The following items may be taxed and awarded as costs unless otherwise directed:
(2) Matters specially made taxable elsewhere in the statutes or rules.
At the time of events pertinent to the present dispute, when both parties rejected a mediation evaluation, as here, actual costs were provided by GCR 1963, 316.7(b)(3):
(b) If any party rejects the panel’s evaluation, the case proceeds to trial in the normal fashion.
(3) If both parties reject the panel’s evaluation and the amount of the verdict, when interest on the amount and assessable costs from the date of the filing of the complaint to the date of the mediation evaluation are added, is no more than 10 percent greater or less than the panel’s evaluation, each party is responsible for his own costs from the mediation date. If the verdict is in an amount which, when interest on the amount and assessable costs from the date of filing of the complaint to the date of the mediation evaluation are added, is more than 10 percent greater than the panel’s evaluation, the defendant must pay actual costs. If the verdict is in an amount which, when interest and assessable costs from the date of filing the complaint to the date of the mediation evaluation are added, is more than 10 percent below the panel’s evaluation, the plaintiff must pay actual costs.
Actual costs were defined in GCR 1963, 316.8:
Actual costs include those costs taxable in any civil action and a reasonable attorney fee as determined by the trial judge for services necessitated by the rejection of the panel’s evaluation.
Here, the question is whether imposition of actual costs after both parties have rejected a mediation evaluation was governed by GCR 1963, 526.10, which provided:
(2) When costs are to be taxed by the clerk the party entitled to costs shall, within 30 days after the judgment is signed, or within 30 days after the entry of an order denying a motion for new trial or to set aside the judgment, present to the clerk a bill of costs certified or verified as required by subrule 526.11. The clerk shall, within 10 days thereafter, examine the bill and allow only those items which appear to be correct and shall strike out all charges for services which in his judgment were not necessary to be performed. Failure to present a bill of costs within the time prescribed shall constitute a waiver of the right to such costs.
This is an issue of first impression in Michigan. We hold that the thirty-day time limit found in GCR 1963,. 526.10(2) should not be applied to actual costs awarded under the mediation rules.
Interpretations of the court rules governing costs are not always clear and are often seemingly contradictory. Defendant relies primarily on Cope v St Clair, 28 Mich App 380; 184 NW2d 464 (1970), a condemnation case. Plaintiffs moved for taxable costs, attorney fees, expert witness fees, photographer fees and interest, but defendant’s motion to dismiss pursuant to GCR 1963, 526.10(2) was granted on the ground that it was not timely filed. The Court cited DeCort v New York Central R Co, 377 Mich 317; 140 NW2d 479 (1966), for the proposition that costs not filed within the thirty-day period are waived unless they are not the sort of costs which have historically and statutorily been taxed by the court clerk. Because expert witness fees require judicial determination of the amount, the Cope Court held that the time limits of GCR 1963, 526.10(2) do not apply. 28 Mich App 382.
In Oscoda Chapter of PBB Action Committee, Inc v Dep’t of Natural Resources, 115 Mich App 356, 361-362; 320 NW2d 376 (1982), lv den 417 Mich 905 (1983), this Court again faced the claim that plaintiffs waived the right to apportionment of costs because their motion for such apportionment was not brought within the time limits of GCR 1963, 526.10(2). The Court, in harmony with Cope v St Clair, supra, noted that the subrule did not apply to costs which are not typically apportioned by the court clerk.
We think the reasoning employed by the Cope Court applies here. The thirty-day strictures of GCR 1963, 526.10(2) should not apply to actual costs awarded under the mediation rules. Actual costs include reasonable attorney fees, GCR 1963, 316.8, which are not typically determined by a court clerk. Reasonable attorney fees, where authorized by statute or court rule, are determined by judicial application of the guidelines set forth in Crawley v Schick, 48 Mich App 728, 737; 211 NW2d 217 (1973). See Petterman v Haverhill Farms, 125 Mich App 30; 335 NW2d 710 (1983); Johnston v Detroit Hoist & Crane Co, 142 Mich App 597; 370 NW2d 1 (1985), and Burke v Angies, Inc, 143 Mich App 683; 373 NW2d 187 (1985), lv den 422 Mich 966 (1985), where the Crawley factors were applied in the context of GCR 1963, 316.8. While the thirty-day time limit is sensible in a situation involving simple calculation of statutory costs, actual costs involved in mediation differ from simple court costs because they involve calculation of a reasonable attorney fee.
In conclusion, we hold that, because the reasonable attorney fee portion of actual costs awarded under GCR 1963, 316.8 often requires judicial determination of the amount, the thirty-day time limit in GCR 1963, 526.10(2) does not apply. Plaintiff’s assertion that defendant’s failure to move for costs within thirty days of the judgment or within thirty days of this Court’s disposition of the appeal has resulted in a waiver of defendant’s claim to actual costs is therefore without merit.
III
Next, we consider whether defendant’s attorney moved for costs within a reasonable period of time. Defendant argues that this Court had jurisdiction once plaintiff filed its claim of appeal so that the trial court could not have entertained its motion for costs while the appeal was pending. Plaintiff submits that defendant took an unreasonable amount of time to submit its bill of costs, and urges that the thirty-day time limit prescribed in GCR 1963, 526.10(2) should be used as a guideline for setting a reasonable time limit. Plaintiff contends further that the time limit should run from the time of entry of judgment, as the circuit court had concurrent jurisdiction over the matter until the record was filed for appeal with this Court. We hold that fifty-five days from the time this Court issued its decision was not an unreasonably lengthy amount of time for defendant to wait to file its motion for costs.
This Court had jurisdiction over this case once plaintiff filed its claim of appeal and paid the entry fee. GCR 1963, 802.1. Such a timely appeal may prevent the operation of the thirty-day limit for submitting a bill of costs pursuant to GCR 1963, 526.10(2). The prevailing party is not required to submit his bill of costs before he knows whether an appeal will be taken. 3 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), 1984 Supplement, p 36. The thirty-day limit "provides reasonable time after expiration of the time allowed for appeal in which to file a bill of costs, without unduly extending the time for taxation of costs.” Id. Dicta from North American Steel Corp v Siderius, Inc, 75 Mich App 391, 406; 254 NW2d 899 (1977), lv den 402 Mich 810 (1977), quoted by plaintiff, indicates this Court’s approval of imposing the time limit for taxing costs after the appeal has been concluded. In H & S Horse Vans, Inc v Carras, 144 Mich App 712, 721; 376 NW2d 392 (1985), this Court indicated that costs are "rarely” taxed at the time judgment is entered, and may be taxed at a later date because the data needed to tax costs is not usually gathered until after the prevailing party has been determined, citing 3 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 91. Given the above, we think it was reasonable for defendant to wait until this Court had affirmed the trial court’s decision before compiling its bill of costs.
We do not hold that a motion for costs awarded pursuant to GCR 1963, 316.8 can be made at any time. Such a motion should be brought within a reasonable time after the prevailing party has been determined. Under the circumstances, fifty-five days after this Court’s resolution of the appeal is not an excessively long time, given the complexity of the trial and the sums of money involved.
IV
Plaintiff claims that the mediation rules are unconstitutional as applied to this case. Plaintiff cites analogous federal cases and argues that the Supreme Court may not go beyond the rja and allocate substantial attorney fees. We reject, as did the trial court, plaintiff’s argument that application of GCR 1963, 316.7 and 316.8 to this action is unconstitutional.
At the outset, we note that the rja expressly allows taxing of costs authorized by court rule. See MCL 600.2405(2) and (6); MSA 27A.2405(2) and (6). This in itself is sufficient legislative authorization for promulgation of GCR 1963, 316.7.
This Court addressed many of plaintiff s arguments in Maple Hill Apartment Co v Stine, 131 Mich App 371, 375; 346 NW2d 555 (1984), vacated and remanded on other grounds 422 Mich 863 (1985). We recognzie that the Supreme Court vacated Maple Hill, supra, and remanded for reconsideration in light of former Oakland Circuit Court Rule 18.12, for the reason that GCR 1963, 316 did not take effect until after the mediation proceedings in that case had been concluded. Nevertheless, the logic of Maple Hill persuades us. There, this Court held that GCR 1963, 316.8 was procedural in nature and not an invalid promulgation of substantive law. 131 Mich App 375. See, also, discussion in partial concurrence by J. T. Kallman, J., 131 Mich App 381-383.
The mediation procedure is not a trial on the merits, as plaintiff suggests. Following a limited presentation by the parties, GCR 1963, 316.6(e) and (f), the mediators propose a resolution which the parties may adopt. If any party rejects the award, that party receives a trial on the merits. The right to trial is not foreclosed by potentially heavy mediation costs. Moreover, procedures are provided for removal from mediation upon the objection of a party. GCR 1963, 316.3. We are satisfied that the mediation rule is procedural and does not represent substantive law lacking legislative approval.
Finally, we reject plaintiffs claim that the mediation rules should not be applied with "wooden literalness” and that trial was not necessitated by plaintiffs rejection of the mediation award. Plaintiff further argues that not all of defendant’s requested attorney fees were reasonable or necessitated by plaintiffs rejection. That issue should be dealt with by the trial court on remand when it imposes costs and determines a reasonable attorney fee.
v
In conclusion, we hold that GCR 1963, 526.10(2) should not apply to actual costs, which include a reasonable attorney fee, awarded under the mediation rules. Moreover, a party may wait to file its motion for actual costs until the prevailing party has been determined following appeal, and then should file the motion within a reasonable time. Here, fifty-five days after this Court’s opinion was issued was not an unreasonable time to wait. Nor do we accept plaintiffs argument that the mediation rule is unconstitutional as an invalid promulgation of substantive law by the Supreme Court. We reverse the trial court’s denial of defendant’s motion for actual costs, and remand for an assessment of actual costs to which defendant is entitled under GCR 1963, 316.8.
Reversed and remanded.
Several of the cases relied upon by plaintiff provide little authority. In DeCort v New York Central R Co, 377 Mich 317; 140 NW2d 479 (1966), the question of late costs was reached only in a minority opinion. 377 Mich 332-333. Bayley Products, Inc v American Plastic Products Co, 30 Mich App 590; 186 NW2d 813 (1971), lv den 385 Mich 754 (1971), involved parties who had complied with GCR 1963, 526.10. Plaintiff also cites North American Steel Corp v Siderius, Inc, 75 Mich App 391, 406; 254 NW2d 899 (1977), which makes a brief reference to the filing of a bill of costs within thirty days of the opinion, but provides scant guidance here.
We realize that defendant was not required to wait for this Court’s decision before filing its bill of costs. In Lincoln v Gupta, 142 Mich App 615, 630-631; 370 NW2d 312 (1985), this Court held that the circuit court still has jurisdiction to award costs after a claim of appeal is filed, given that a judgment awarding costs is enforceable absent an order staying enforcement. Nonetheless, defendant was not required to seek costs prior to resolution of the appeal.
Plaintiff apparently raised these claims in the trial court, which rejected them. An appellee who has not cross-appealed may urge in support of a judgment in his favor reasons rejected by the trial court. Fass v Highland Park (On Rehearing), 321 Mich 156, 158; 32 NW2d 375 (1948). | [
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Per Curiam.
Defendant was convicted of knowingly making false statements of material facts in his application for the certificate of title provided for in the Michigan Vehicle Code, MCL 257.254; MSA 9.1954. Defendant was also convicted as an habitual offender, second offense. Sentenced to a prison term of from 2 V¿ to 10 years, defendant appeals as of right. We affirm.
The evidence tends to show a scheme to defraud an insurance company. On September 27, 1982, the Frisco’s Towing & Storage yard reported that its 1978 Chevrolet wrecker was stolen. In fact, the wrecker was not stolen. It appears that the defendant and Charles Louis Francisco, part owner of the Frisco’s yard, conspired together to hide the wrecker and modify it to look like another vehicle, which defendant could then use.
In early November, 1982, defendant bought for $100 the cab and rear frame of a 1976 Chevrolet half-ton pickup truck. This truck had been "totaled” in an accident and donated by the owner to a vocational training center. After the truck was dismantled, some of its parts were offered for sale, and defendant was able to obtain the cab and frame. The vocational training center had never titled the wreck and turned the previous owner’s certificate of title over to defendant with the transferee space still blank.
On November 9, 1982, defendant or an acquaintance took the certificate for the 1976 Chevy to an office of the Secretary of State and applied for an "expedited” title in the name of Ray Mars. Because Mars’ signature as transferee was notarized, the office personnel did not request identification. Subsequent investigation revealed that Ray Mars was a dead man, that his "signature” may have been written by Charles Francisco, and the "notarization” was made by someone who was not a notary. The higher of the full purchase price or retail value was given as $1,000.
On November 29, 1982, defendant went to an office of the Secretary of State to apply for a certificate of title showing his ownership of the 1976 Chevy. On his application, defendant stated that he purchased the truck on November 18, 1982, from Ray Mars for $500, that the truck weighed 4,122 pounds and that it was insured by the Samples Insurance Agency. Defendant obtained a license plate, number CS 0148.
On December 7, 1982, detectives found the 1976 truck cab at the Frisco’s yard with the vehicle identification number (vin) plate removed. By checking in a hidden location, they verified the true vin of the cab.
On January 6, 1983, acting on a tip, detectives found a Chevy wrecker bearing the vin plate from the 1976 cab and a license plate with defendant’s number CS 0148 and which had written on its side the name "T & N Towing” and defendant’s telephone number. Defendant’s 1976 truck registration was in the glovebox. However, the wrecker was a 1978 Chevy and a check of the hidden vin revealed that it was the wrecker reported stolen by the Frisco’s yard.
The wrecker was impounded, but it was returned to the Frisco’s yard on January 26, 1983. The next day, a detective saw defendant driving the vehicle.
In October, 1983, defendant told a detective that the whole thing was Charles Francisco’s idea. Defendant maintained then, as he continues to do now, that he did not know that what he had done was wrong.
The first two complaints filed against defendant were dismissed. The third alleged six false statements of material facts: (1) that defendant owned a 1976 Chevrolet pickup truck; (2) that the seller was Ray Mars; (3) that the truck weighed 4,122 pounds; (4) that the truck was purchased on November 18, 1982; (5) that the purchase price was $500; and (6) that the truck was insured by the Samples Insurance Agency. The district court concluded as a matter of law that only the second, fourth and fifth statements involved material facts. Subsequently, the prosecutor conceded that the date of purchase was not material. Thus, the jury considered only whether defendant had knowingly made false statements by indicating on the application for title that he purchased the truck from Ray Mars and that the purchase price was $500.
On appeal, defendant argues that MCL 257.254; MSA 9.1954 is unconstitutionally vague. He further contends that any construction of the statute which would cure the vagueness and bring his actions within the statute’s reach cannot be retroactively applied to support his conviction.
As a foundation for answering defendant’s argument, some discussion of the statute and its context is in order. The statute is only one part of a statutory scheme dealing with automobiles and stolen goods in general. The Michigan Penal Code prohibits receiving, possessing and concealing stolen property, MCL 750.535; MSA 28.803, and removing and defacing of vins, MCL 750.415; MSA 28.647. People v Boscaglia, 419 Mich 556, 564; 357 NW2d 648 (1984). The provisions of the Vehicle Code are to be distinguished in that they "must be read to be germane only to conduct affecting titles or their fraudulent transfer.” People v Morton, 384 Mich 38, 40; 179 NW2d 379 (1970).
Intertwined in the provisions of the Vehicle Code governing certificates of title are purposes to combat fraud and theft and to enhance safety. For example, assume that the truck cab that defendant purchased from the training center had been from a 1978 vehicle. When that vehicle was wrecked in September, 1982, it became a "distressed vehicle,” MCL 257.12a; MSA 9.1812(1), and would also have been a "late model vehicle,” MCL 257.24b; MSA 9.1824(2). Upon acquisition of this vehicle, the vocational training center would have been required to surrender the assigned certificate of title and make application for a salvage certificate of title. MCL 257.217c(3); MSA 9.1917(3)(3). When defendant then purchased the cab, he would not have been able to obtain a regular certificate of title until he rebuilt the truck to comply with the equipment standards of the code and proved his ownership of the repair parts used to the satisfaction of a specially trained police officer. MCL 257.217c(5); MSA 9.1917(3)(5). The existence of the salvage certificate of title would have to be noted on any subsequent application for a certificate of title. MCL 257.217(1)(b); MSA 9.1917(1)(b). The fact that these provisions apply only to late model vehicles apparently reflects a legislative choice to focus on the most pressing aspect of a problem, since late model vehicles presumably outnumber older model vehicles and are more expensive and more desirable than older vehicles.
Other provisions of the Vehicle Code reveal a legislative intention that the availability of certificates of title be strictly limited. MCL 257.219(2); MSA 9.1919(2) provides that the Secretary of State shall refuse issuance of a certificate of title upon certain grounds, including that "the applicant is not entitled to the issuance of a certificate of title.” By negative inference, the command of MCL 257.217(1); MSA 9.1917(1), that an owner of vehicle subject to registration must apply for issuance of a certificate of title, suggests that an owner of a vehicle which is not a motor vehicle or of a motor vehicle not subject to registration is not entitled to issuance of a certificate of title. See MCL 257.216; MSA 9.1916. Thus, defendant was not entitled to issuance of a certificate for this 1976 cab and rear frame as, in the absence of an engine and front frame and axle, it was assuredly not a motor vehicle. Boscaglia, supra. This conclusion is supported by MCL 257.258; MSA 9.1958, which permits the Department of State to cancel, revoke or suspend the certificate of title to a registered vehicle which has been dismantled or wrecked.
While the Department of State is authorized to make investigations, MCL 257.209; MSA 9.1909, it is clear that the department must place great reliance on the information provided in an application for certificate of title. To this end, the Legislature has set forth what information is required, authorized the Secretary of State to demand additional information, provided for the refusal to issue or revocation of a certificate of title if a false statement is made, and further provided, in § 254, for criminal penalties if the false statement is of a material fact.
What is a material fact for purposes of § 254 has not been addressed by the appellate courts of this state. In People v Ciatti, 17 Mich App 4; 168 NW2d 902 (1969), this Court concluded that representing the duplicate title of one automobile to constitute title to a stolen automobile was a false statement of a material fact. The Court did not explain its reasoning. CJI 24:4:02(3) states that a material fact means "an essential matter required for a valid transfer.” The instruction does not state its source. With this meaning the statutory language "of a material fact” arguably is rendered redundant because every false statement is grounds for refusal to issue a certificate, MCL 257.219(2)(a); MSA 9.1919(2)(a), or, where the department discovers the false statement after issuance, for cancellation, revocation or suspension of the certificate. MCL 257.258; MSA 9.1958.
We need not decide in this case how broad a meaning the term "material fact” may or ought to be given. Defendant’s false statements that he purchased the truck from Ray Mars for a price of $500 were obviously calculated to cover up the true nature of his transaction with the vocational training center. Had he stated the value of the six-year old truck as $100, the Department of State may have been suspicious and investigated whether the alleged vehicle qualified as a "motor vehicle subject to registration.” Had he truthfully named his seller, the department’s investigation would have been a short and simple matter. Defendant’s actions are prohibited by § 254 without any need for a judicial gloss. Accordingly, defendant’s vagueness challenge must fail because the statute is not vague as applied to the facts of this case. People v Mitchell, 131 Mich App 69, 74-75; 345 NW2d 611 (1983).
Defendant raises several other issues which we will address only briefly. Defendant argues that the trial court erred by deciding as a matter of law the issue of material fact. Defendant asserts that the issue is for the Legislature or, at the least, should have gone to the jury. We disagree. In Michigan, materiality is generally an issue for the court to decide. People v Hoag, 113 Mich App 789, 798; 318 NW2d 579 (1982), lv den 417 Mich 896 (1983).
Defendant also argues that the trial court erred in giving a specific intent instruction. This argument is meritless because the instruction, if error, imposed a greater burden of proof on the prosecutor than required and thus favored defendant. Nevertheless, defendant argues that he was prejudiced because the court’s viewing of the crime as being one requiring the showing of specific intent opened the door for the prosecutor to introduce prejudicial evidence of motive. This argument is misplaced because the evidence of motive was relevant and admissible even if the crime is one of general intent. People v Federico, 146 Mich App 776, 793; 381 NW2d 819 (1985); People v Handley (On Remand), 135 Mich App 51, 58; 352 NW2d 343 (1984) , rev’d 422 Mich 859 (1985).
Defendant next argues that the evidence was insufficient and the court erred by denying his motions to quash and for a directed verdict. If anything, there was more evidence against defendant at the preliminary examination than at trial. We are satisfied that the evidence, viewed in a light most favorable to the prosecution, suports finding beyond a reasonable doubt that defendant applied for a vehicle certificate of title, made false statements of material facts and made the statements knowing them to be false.
Defendant finally argues that he was denied a fair trial because of a "plethora” of errors including but not limited to a list of alleged errors provided in his brief. A mere statement of position without argument or citation of authority is insufficient to bring the issue before an appellate court. Federico, supra, p 797. Thus, we find it unnecessary to review many of the alleged errors. Suffice it to say, upon our review of the record, we do not find that defendant was denied a fair trial.
Affirmed. | [
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M. J. Kelly, J.
In this case, plaintiffs challenge the constitutionality of Michigan’s Single Business Tax Act, MCL 208.1 et seq.; MSA 7.558(1) et seq. Plaintiffs argue that the act contravenes the Michigan Constitution because (1) it imposes a tax upon the exercise of a fundamental constitutional right, (2) it imposes a double income tax on certain Michigan taxpayers in contravention of the uniformity requirement of Const 1963, art 9, § 3, and (3) it effectively imposes a graduated income tax contrary to Const 1963, art 9, § 7. The trial court held as a matter of law that the statute was constitutional and summarily dismissed plaintiffs’ complaints. We affirm.
On January 11, 1982, plaintiffs in this case filed four separate actions in the Court of Claims seeking single business tax refunds for the years 1977 to 1979. Initially, the only issue raised in each action was whether certain monies paid by financial institutions to new car dealerships in the course of dealer-arranged new car financing constituted interest as used in the Single Business Tax Act. This precise issue was pending before this Court and was resolved against the plaintiff in Town & Country Dodge, Inc v Dep’t of Treasury, 118 Mich App 778; 325 NW2d 577 (1982), lv gtd 417 Mich 1054 (1983). On December 2, 1982, after the release of this Court’s opinion in Town & Country Dodge, Inc, supra, plaintiffs filed separate amended complaints in the Court of Claims raising for the first time the constitutionality of the Single Business Tax Act. Plaintiffs then moved for summary judgment under GCR 1963, 117.2(2), now MCR 2.116(C)(9), for failure of defendant to state a valid defense to the constitutional claims.
Plaintiffs’ actions were consolidated at the trial court level for purposes of the summary judgment motion, which the Court of Claims denied by opinion and order dated July 12, 1984. The court held that plaintiffs’ constitutional claims had been decided adversely to plaintiffs in Stockler v Dep’t of Treasury, 75 Mich App 640; 255 NW2d 718 (1977), lv den 402 Mich 802 (1977), app dis 435 US 963; 98 S Ct 1598; 56 L Ed 2d 54 (1978), and that plaintiffs’ remaining claims had been decided adversely to plaintiffs in Town & Country Dodge, Inc, supra. The Court of Claims summarily dismissed plaintiffs’ complaints pursuant to defendant’s oral motion for summary judgment under GCR 1963, 117.2(1), now MCR 2.116(C)(8), on the ground that plaintiffs had failed to state a cause of action for which relief could be granted.
Plaintiffs appealed the orders of summary judgment as of right and all four cases were consolidated for purposes of appeal. Pursuant to plaintiffs’ motion, this Court granted a stay pending the Supreme Court’s review of Town & Country Dodge, Inc, supra. An opinion in that case was issued on December 28, 1984, in favor of defendant. Town & Country Dodge, Inc v Dep’t of Treasury, 420 Mich 226; 362 NW2d 618 (1984), reh den 421 Mich 1202 (1985). Plaintiffs agree that the Supreme Court’s decision resolves all lesser claims of error raised in the instant cases, leaving only plaintiffs’ constitutional arguments to be considered in this appeal.
The particular arguments presented in this case have, been raised in this forum before. Contrary to defendant’s brief on appeal, however, they have not all been decided. These three issues were first presented in Stockler, supra, and again in Town & Country Dodge, Inc, supra. In Stockler, we considered whether the Single Business Tax Act interfered with a fundamental constitutional right to engage in business activity and whether the act imposed a graduated income tax on Michigan taxpayers. Stockler, however, was commenced as an action for declaratory relief prior to the effective date of the Single Business Tax Act and some of the constitutional arguments raised were viewed as nonjusticiable. In Town & Country Dodge, Inc, supra, plaintiffs failed to raise their constitutional arguments before the Michigan Tax Tribunal and this Court thus declined to consider them on appeal. 118 Mich App 789. See also, 420 Mich 228, n 1. In any event, plaintiffs’ constitutional argu ments are now before us and we consider them each in turn.
Plaintiffs first argue that MCL 208.31; MSA 7.558(31) is unconstitutional on its face because it includes language which transforms a fundamental constitutional right (the right to engage in business) into a mere privilege. Plaintiffs further argue that because the right to engage in business is a fundamental constitutional right, the Legislature may not impose a tax upon the exercise of that right and its attempt to do so in the form of the single business tax must be disallowed.
MCL 208.31; MSA 7.558(31) provides in relevant part:
(1) There is hereby levied and imposed a specific tax of 2.35% upon the adjusted tax base of every person with business activity in this state which is allocated or apportioned to this state.
(4) The tax so levied and imposed is upon the privilege of doing business and not upon income.
Plaintiffs focus on the language "privilege of doing business” in attacking the constitutionality of the Single Business Tax Act on its face. Generally, however, we will uphold a statute as constitutional wherever it may be reasonably construed in a manner that is consistent with the constitution of this state. Tax laws, in particular, are accorded a presumption of constitutionality. Kostyu v Dep’t of Treasury, 147 Mich App 89, 93; 382 NW2d 739 (1985); Butcher v Dep’t of Treasury, 141 Mich App 116, 119; 366 NW2d 15 (1984), lv gtd 422 Mich 934 (1985). In our view, MCL 208.31(4); MSA 7.558(31)(4) simply provides that the single business tax is not an income tax but a tax upon business activities conducted in this state. We do not interpret MCL 208.31(4); MSA 7.558(31)(4) as a legislative pronouncement regarding the status of any fundamental constitutional rights. Plaintiffs admit in their brief on appeal that the Legislature may impose a tax on business activities and we conclude that the Single Business Tax Act is a proper exercise of its taxing powers.
Moreover, in Stockler, 75 Mich App 646, we considered whether the right to engage in business is a fundamental constitutional right:
Plaintiff cites Murdock v Pennsylvania, 319 US 105; 63 S Ct 870; 87 L Ed 1292 (1943), in support of his contention that the right to engage in business is a fundamental right which cannot be taxed. Murdock distinguished first amendment activity from commercial activity and held that a tax could not be imposed on the privilege of engaging in the former. The right or privilege of engaging in business is an important aspect of liberty, but it is not a fundamental right. Griswold v Connecticut, 381 US 479; 85 S Ct 1678; 14 L Ed 2d 510 (1965), Ferguson v Skrupa, 372 US 726; 83 S Ct 1028; 10 L Ed 2d 93 (1963). Business and occupations may be regulated and taxed.
We fully agree with this analysis and conclude that plaintiffs’ first constitutional argument is without merit.
Plaintiffs next argue that the single business tax violates the state constitutional prohibition against double taxation. Const 1963, art 9, § 3. We disagree. Plaintiffs’ entire argument is built on the theory that the single business tax is a tax upon income, a theory which has consistently been rejected by the appellate courts of this state. Rather, Michigan’s single business tax is a value-added tax imposed on an activity rather than on the income which results from the activity. See Mobil Oil Corp v Dep’t of Treasury, 422 Mich 473, 493-497; 373 NW2d 730 (1985); Wismer & Becker Contracting Engineers v Dep’t of Treasury, 146 Mich App 690, 696; 382 NW2d 505 (1985); Kelvinator, Inc v Dep’t of Treasury, 136 Mich App 218, 235; 355 NW2d 889 (1984), lv den 421 Mich 861 (1985). Since the single business tax operates uniformly upon all persons engaged in business activities in this state, it complies with the uniformity requirement of Const 1963, art 9, § 3.
Plaintiffs finally argue that the single business tax constitutes a graduated income tax in violation of Const 1963, art 9, § 7. Again, we disagree. As already discussed, the single business tax is not an income tax and is thus not governed by Const 1963, art 9, § 7. See Davis v Dep’t of Treasury, 124 Mich App 222, 225; 333 NW2d 521 (1983), where a similar argument failed with regard to the tax on intangible personal property, MCL 205.131 et seq.; MSA 7.556(1) et seq. Even more on point, however, is this Court’s opinion in Stockler, supra, where we responded to the identical argument by noting that the single business tax is imposed at a flat rate of 2.35 percent. Although it is true that the amount taxed is based upon federal taxable income, a tax base does not become graduated simply because it incorporates exemptions or exclusions. 75 Mich App 652; Kuhn v Dep’t of Treasury, 384 Mich 378; 183 NW2d 796 (1971). A tax is graduated where it imposes a different taxing rate on different segments of a single taxpayer’s income. Kuhn, supra, pp 388-389. While it is true that the federal income tax is a graduated tax, the single business tax is not based on the taxpayer’s graduated federal tax liability but on taxable income.
For the foregoing reasons, we conclude that plaintiffs’ constitutional arguments are without merit and we affirm the trial court’s summary disposition of this case.
Affirmed.
The Single Business Tax Act provides that a term used in the act and not defined has the same meaning as in United States federal income tax law in effect for the tax year. MCL 208.2(2); MSA 7.558(2).
Defendant’s oral motion for summary judgment should have been brought under GCR 1963, 117.2(3), now MCR 2.116(C)(10). In dismissing these actions, the Court of Claims considered the merits of plaintiffs’ constitutional challenges under the authority of Stockler, supra. Since it is apparent from the lower court proceedings that all parties and the court viewed the motion for summary judgment as a motion for a ruling on the merits, we will proceed to analyze this case on that basis.
Defendant’s entire argument on appeal is that plaintiffs’ constitutional claims have been resolved in Stockler, supra.
The similarity of these constitutional arguments is explained by the fact that plaintiff in Stockler, infra, is an attorney who subsequently represented the taxpayers in Town & Country Dodge, Inc, supra, as well as the taxpayers in the instant case. | [
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Allen, P.J.
On January 28, 1985, in Pinellas County, Florida, petitioner entered a plea of nolo contendere to a charge of driving under the influence of alcoholic beverages. Thereafter, the Michigan Secretary of State received a record of the conviction and, pursuant to MCL 257.319(2); MSA 9.2019(2), suspended petitioner’s driver’s license for a ninety-day period commencing on June 25, 1985.
On September 6, 1985, the Livingston Circuit Court denied petitioner’s motion for reinstatement of her driving privileges. In addition, her motion to have the Florida conviction expunged from her Michigan driving record was denied. From an October 25, 1985, order denying her motion for rehearing and reconsideration, petitioner appeals as of right.
MCL 257.319(2); MSA 9.2019(2) provides:
The secretary of state shall suspend, for [a period not less than 90 days, nor more than 2 years], the license of a person upon receiving the record of conviction of the person for a violation of a law of another state substantially corresponding to [MCL 257.625a or 257.625b; MSA 9.2325(1) or 9.2325(2), which includes operating a vehicle while under the influence of intoxicating liquor]. [Emphasis added.]
Petitioner maintains that the Florida conviction cannot be used as a basis for suspending her license, averring that it does not substantially correspond to its Michigan counterpart. This argument is based on the fact that petitioner allegedly entered her plea by mail and was not advised that the conviction would result in suspension of her license under Michigan law. Pursuant to MCL 257.625(9); MSA 9.2325(9), a comparable plea could not have been accepted in Michigan unless petitioner had been advised of the statutorily required license suspension. See People v Tabar, 132 Mich App 376; 347 NW2d 458 (1984). Due to this distinction in plea-taking proceedings, petitioner maintains that the convictions do not "substantially correspond.” Alternatively, she argues that a suspension based on the Florida conviction would deny her the equal protection of the law. The narrow issue raised is of first impression.
The question posed by the statute is not whether a foreign conviction or procedural guarantee substantially corresponds to its Michigan counterpart. Rather, in order for the penalty of suspension to be triggered, it must be decided that the foreign statute proscribing the behavior in question substantially corresponds to the Michigan statute proscribing the same behavior. MCL 257.319(2); MSA 9.2019(2) imposes a penalty where there has been a conviction for violation of a substantially similar statute. Thus, it is the language of the statute or the behavior proscribed which must substantially correspond to its Michigan equivalent, and not the procedures by which the conviction was obtained.
Fla Stat Ann, § 316.193 provides that one may be found guilty of driving under the influence of alcoholic beverages where he or she is under the influence to the extent that normal faculties are impaired, or where his or her blood alcohol level measures .10 percent or higher. In our opinion the statute "substantially corresponds” to MCL 257.625; MSA 9.2325, and therefore, the trial court did not err in denying petitioner’s motion on this basis.
We also find that petitioner’s equal protection argument must fail. Petitioner has not alleged that any special right or classification is affected by application of this statute. Accordingly, petitioner has the burden of demonstrating that there is no rational basis for the classification which distinguishes between those convicted of drunk-driving charges in Michigan state courts and those convicted in foreign jurisdictions. In other words, petitioner must show that there is no rational relationship between the classification and a legitimate state interest. State Treasurer v Wilson, 132 Mich App 648, 651-652; 347 NW2d 770 (1984), rev’d on other grounds 423 Mich 138 (1985).
In support of her equal protection argument, petitioner merely points out that she has been treated differently. She has not made any showing that this treatment bore no rational relationship to a legitimate state interest. In any event, we believe that a rational relationship exists. The state has a legitimate interest in suspending or revoking the licenses of individuals convicted of drunk-driving charges. For those convicted in this state, the Legislature has required that they be informed of these potential consequences. Although it would be preferable if those convicted in foreign jurisdictions were extended the same courtesy, there is no state authority which can dictate plea-taking procedures to foreign jurisdictions. We believe that this lack of authority provides a rational reason for treating those convicted of drunk-driving charges in this state differently from those convicted in foreign jurisdictions. Therefore, there is no equal protection violation.
Affirmed. | [
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Per Curiam.
Defendant pled guilty to voluntary manslaughter, MCL 750.321; MSA 28.553, pursuant to a plea agreement to dismiss a count of second-degree murder. In calculating the variables for the Sentencing Guidelines grid, the trial court assessed points for intent to kill or injure and exploitation of the victim’s vulnerability, and refused to consider the mitigation variable for avoiding harm, provocation/passion, and mistake/inadvertance. Under the defendant’s proposed scoring, the Sentencing Guidelines would provide for a minimum sentence of twelve to forty-eight months. The trial court’s scoring resulted in a minimum of sixty to ninety-six months. Defendant was sentenced to serve eight to fifteen years in prison.
Though the defendant states his first issue on appeal as being whether the trial court is obligated to respond to alleged inaccuracies in the Sentencing Information Report, we note that the trial court did in fact respond to the alleged inaccuracies raised by defense counsel. The argument more properly phrased appears to be whether the trial court must review the alleged inaccuracies in the same manner as inaccuracies in a presentence report, or whether the court may draw reasonable inferences from evidence contained in the record of the preliminary examination, as was done by the trial court in the present case. We conclude that the trial court did not err by resolving the dispute in this manner.
Presentence reports are required by statute, MCL 771.14; MSA 28.1144, and review by the trial court of alleged inaccuracies in them is required under both the statute and MCR 6.101(K). The Sentencing Guidelines, however, were promulgated under Administrative Order No. 1984-1, 418 Mich lxxx. The guidelines are to serve merely as a tool for the trial judge in the exercise of his sentencing discretion. People v McLeod, 143 Mich App 262; 372 NW2d 526 (1985). See, also, Statement of Purpose, Michigan Sentencing Guidelines Manual. The adoption of the Sentencing Guidelines by the Supreme Court did not give substantive rights to the defendant.
We conclude that a trial court’s scoring of points for offense variables will be upheld if there is any evidence that supports that scoring. People v Clark, 147 Mich App 237; 382 NW2d 759 (1985). Accordingly, evidence contained in the preliminary examination record may be used to support the trial court’s scoring of offense variables. Since there was some evidence to support all the scoring decisions of the trial court, the recommended sentencing range as calculated by the trial court withstands our limited appellate review.
Defendant finally asserts that the sentence imposed should shock the judicial conscience of this Court under People v Coles, 417 Mich 523; 339 NW2d 440 (1983). The sentence imposed was within the guideline range. We conclude that it does not shock our judicial conscience.
Affirmed.
When confronted with alleged inaccuracies in the presentence report, the trial court must 1) hold an evidentiary hearing on the contested information, 2) accept the defendant’s version of the facts, or 3) ignore the alleged inaccurate information. People v Gray, 125 Mich App 482, 487; 336 NW2d 491 (1983). | [
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W. F. Hood, J.
In this action for legal malpractice, plaintiffs, William R. Beattie and Linda K. Beattie, appeal by leave granted from a Wayne Circuit Court order afirming the district court’s judgment of no cause of action based upon a directed verdict. Plaintiffs claim (1) that the district court erred when it granted a directed verdict to defendant and (2) that the district court erred when it prevented plaintiffs from eliciting expert testimony from defendant. We do not think the lower court erred in the ways suggested by plaintiffs and accordingly we affirm.
i
Plaintiffs’ legal malpractice action against defendant, Stuart J. Firnschild, concerned the title to a house at 1242 Thirteenth Street in Wyandotte, Michigan.
Plaintiffs were married in 1969. Catherine Davis is plaintiff Linda Beattie’s mother. The Beatties rented the house on Thirteenth Street from Mrs. Davis, who owned it, some ten months after they were married. They lived there five years and then discussed with Mrs. Davis the possibility of purchasing the house. After Mrs. Davis agreed to sell them the house in 1976, the Beatties and Mrs. Davis went to see defendant to have the necessary papers drawn.
Defendant agreed to handle the matter. He took the deed from Mrs. Davis and agreed to draw up a land contract. At the meeting, defendant did not advise plaintiffs of the cost of title insurance nor did he advise that a title search should be done. There was no discussion about an existing title policy or title commitment. Moreover, defendant represented all three parties.
A week later, the three returned to defendant’s office to sign the papers. Defendant was not present but his secretary gave them the land contract, which the Beatties and Mrs. Davis signed. The plaintiffs paid a down payment to Mrs. Davis and began making the monthly payments on the land contract.
At some point the Beatties decided to build a house on Grosse lie. Because they lacked funds for the down payment, they asked Mrs. Davis to move in with them. Plaintiffs informed Mrs. Davis that they could not afford to build the new house unless they had the entire equity in the Thirteenth Street house for a down payment. Mrs. Davis was receptive to the idea.
Plaintiffs and Mrs. Davis went again to see defendant in 1978, explaining that they wanted Mrs. Davis to deed the Thirteenth Street house to them so they could build a new house. Defendant, concerned about protecting Mrs. Davis, indicated that he would meet with them later to take care of a way to protect Mrs. Davis’ $16,000 equity in the house.
Plaintiffs and Mrs. Davis met again with defendant. Defendant indicated that he and Mrs. Davis had talked and arrived at a way of protecting her. Mrs. Davis signed the warranty deed.
Sometime later, there was another meeting with defendant. Defendant indicated he had prepared a document to protect Mrs. Davis which would go into effect when they signed a purchase agreement for the new house. The plaintiffs signed an agreement with a construction company, applied for a mortgage, and signed the documents to protect Mrs. Davis.
It took about a year and a half to complete the new house. In the meantime, plaintiffs decided to sell the Thirteenth Street house. They got a written deed on the house and signed the purchase agreement. When the realtor ordered title work on the house, a problem was discovered. A quitclaim deed, which conveyed the property from Mrs. Davis to herself and her three daughters as joint tenants with rights of survivorship, signed by Mrs. Davis in January, 1971, was discovered. The quitclaim deed was witnessed by plaintiff William Beattie’s father. William Beattie was also present at the signing, but he did not remember it. Plaintiff Linda Beattie was also present when the quitclaim deed was signed, but she apparently believed it was a will.
Plaintiff William Beattie was unsuccessful in getting his wife’s sisters to sign the deed and the Thirteenth Street house was never sold. Plaintiffs moved into the Grosse lie house by borrowing money from other relatives and the builder. Mrs. Davis never moved in with plaintiffs. Plaintiffs eventually sold the Grosse He house in 1982 for $150,000, earning roughly $32,000 on the house.
On June 4, 1980, plaintiffs filed their legal malpractice claim against defendant in Wayne Circuit Court. In November, 1982, the case was removed to the 27th District Court. The district court directed a verdict for defendant in February, 1984, and plaintiffs appealed to the Wayne Circuit Court, which affirmed the directed verdict. This Court granted plaintiffs’ application for leave to appeal on June 17, 1985.
ii
Plaintiffs claim the district court erred when it granted the directed verdict in favor of defendant on the basis that plaintiffs had failed to supply expert testimony. We review the grant of defendant’s motion for directed verdict by asking whether plaintiffs’ proofs, viewed in a light most favorable to plaintiffs, are sufficient on each element of the claim to justify submitting it to the jury. Association Research & Development Corp v CNA Financial Corp, 123 Mich App 162, 169; 333 NW2d 206 (1983), lv den 419 Mich 881 (1984). In an action against an attorney for negligence or breach of an implied contract, the plaintiff has the burden of proving four elements: (1) the existence of the attorney-client relationship; (2) the acts which are alleged to have constituted the negligence; (3) that the negligence was the proximate cause of the injury; and (4) the fact and extent of the injury alleged. Basic Food Industries, Inc v Grant, 107 Mich App 685, 690; 310 NW2d 26 (1981), lv den 413 Mich 913 (1982).
An attorney is obligated to use reasonable skill, care, discretion and judgment in representing a client, assuming the position of highest trust and confidence. Lipton v Boesky, 110 Mich App 589, 594; 313 NW2d 163 (1981). The Code of Profes sional Responsibility is a standard of practice for attorneys which expresses in general terms the standards of professional conduct expected of lawyers in their relationships with the public, the legal system, and the legal profession. Lipton, supra, p 597. There is a rebuttable presumption that violations of the Code of Professional Responsibility constitute actionable malpractice. Sawabini v Desenberg, 143 Mich App 373, 385; 372 NW2d 559 (1985).
This Court discussed a plaintiffs obligation to offer expert testimony in a legal malpractice action in Joos v Auto-Owners Ins Co, 94 Mich App 419, 422; 288 NW2d 443 (1979), lv den 408 Mich 946 (1980). The Court noted:
The issue presented, as to whether a plaintiff in a legal malpractice action must offer expert testimony as to the standard of care to which an attorney will be held and as to a violation of that standard, has not been addressed previously by any published Michigan authority. As a general principle, an attorney must bring to bear the skill, learning, and ability of the average practitioner of law when conducting legal business for a client. He or she must exercise ordinary care or diligence in the prosecution of the client’s interests. Babbitt v Bumpus, 73 Mich 331; 41 NW 417; 16 Am St Rep 585 (1889), 7 Am Jur 2d, Attorneys at Law, § 168, pp 146-147.
In our attempt to resolve the issue before us, we have been guided somewhat by Michigan case law authority in the area of medical malpractice. The commonly held rule in medical malpractice cases is that expert testimony is a prerequisite to a plaintiff-patient’s right to recover from either a physician or a hospital. Bivens v Detroit Osteopathic Hospital, 77 Mich App 478, 488; 258 NW2d 527 (1977), rev’d on other grounds 403 Mich 820 (1978). However, this is not an absolute principle of law devoid of exceptions.
Thus, it held:
Although proof of purported negligence arising from pretrial or trial strategy may or may not require expert testimony, plaintiffs’ allegation that defendant breached the applicable standard of care when he failed to inform Avery of the offers by Joos to settle prior to trial and their allegation that he refused to settle on the second day of trial when he received authority to do so does not. We do not hesitate to hold that under the allegations of facts before us, an attorney has, as a matter of law, a duty to disclose and discuss with his or her client good faith offers to settle. It is well within the ordinary knowledge and experience of a layman jury to recognize that, under facts such as those alleged in the instant case, the failure of an attorney to disclose such information is a breach of the professional standard of care. [Footnote omitted. 94 Mich App 424.]
Here, plaintiffs urge that expert testimony is only required where the malpractice claim is not covered by any specific provision in the Disciplinary Rules. In the plaintiffs’ view, the Disciplinary Rules and the Code of Professional Responsibility have the effect of statutes and whether they have been violated is a question of law. They assert that the court need not take expert testimony to explain a violation of a statute.
This reasoning is flawed. This Court has rejected the argument that a violation of the Code of Professional Responsibility is negligence per se, in favor of the proposition that a code violation is rebuttable evidence of malpractice. See Lipton, supra, pp 595-598. In our view, plaintiffs’ allegation that the Disciplinary Rules have been violated, rather than an allegation that the common-law standard of care has been breached, does not relieve them of the obligation to present expert testimony, unless the violation was so obvious that such testimony was not required.
Plaintiffs claim that defendant violated DR 5-105 of the Code of Professional Responsibility, which prohibits lawyers from representing multiple clients with conflicting interests. Other states have required expert testimony in legal malpractice actions where the lawyer has been similarly accused. See 14 ALR4th 170, § 7, p 188.
Expert testimony in this case was required to establish that defendant violated DR 5-105. Defendant was representing members of this family in a simple real estate transaction. It is not obviously apparent that defendant violated the Code of Professional Responsibility. This is especially true if defendant happened to believe his independent judgment would not be adversely affected by representing these multiple clients. See DR 5-105(A).
Joos, supra, is distinguishable. In Joos, the defendant did not inform his clients of settlement offers. Here, the Disciplinary Rule is fairly vague. See 14 ALR4th 170, § 7, supra. The trial court did not err by concluding that expert testimony was required to establish a prima facie case of malpractice under the facts presented.
III
Next we consider whether the district court erred when it prevented plaintiff from eliciting expert testimony from defendant in this legal malpractice action. We find no error.
In circuit court, plaintiffs filed a witness list which listed only themselves as witnesses. Defendant was presumably listed on his list. When the case was remanded to district court, the court signed a pretrial order which ordered the parties to exchange lists of witnesses to be called at trial, and ordered that no witness could be called unless listed except on leave granted upon a showing of good cause. At trial, the district court precluded plaintiffs from calling defendant as their expert witness.
A plaintiff in a malpractice case may elicit required expert testimony from the defendant. Wallace v Garden City Hospital, 111 Mich App 212, 216; 314 NW2d 557 (1981), rev’d on other grounds 417 Mich 907 (1983); Rice v Jaskolski, 412 Mich 206, 212; 313 NW2d 893 (1981). It is, however, within the trial court’s discretion to admit or exclude such testimony, and the exercise of discretion will not be disturbed absent a clear abuse of that discretion. Wood v Posthuma, 108 Mich App 226, 230; 310 NW2d 341 (1981), lv den 413 Mich 923 (1982).
We find no abuse in the trial court’s determination that plaintiffs could not call defendant as an expert witness. See Wood, supra; Davis v Lhim, 124 Mich App 291, 309; 335 NW2d 481 (1983), remanded for reconsideration in light of Ross v Consumers Power Co (On Rehearing), 420 Mich 567; 363 NW2d 641 (1985), see 422 Mich 875; 366 NW2d 7 (1985). Defendant was entitled to some notice that he was to be called as an expert to testify against himself and establish a standard of care. The adverse party statute did not relieve plaintiffs of the obligation to list witnesses. Detroit v Porath, 271 Mich 42, 75; 260 NW 114 (1935). We perceive no absolute right on plaintiffs’ part to call defendant as an expert witness.
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Gage, J.
Defendants appeal as of right from a November 1994 trial court judgment awarding them $351,991.80. Defendants had filed a multiple-count counterclaim against plaintiff alleging misconduct relating to plaintiffs long-term relationship lending defendants money to support their farming operations. The jury found for defendants on several counts. Plaintiff cross appeals as of right from the November 1994 judgment.
Plaintiff is a federally created entity that makes loans to its borrowers/members for use in conducting agricultural activities. Defendants are farmers who, since the fall of 1980, have received numerous loans from plaintiff. From 1980 to 1990, plaintiff loaned defendants $839,805, of which defendants themselves received $460,000, with plaintiff, at defendants’ direction, paying the difference to defendants’ third-party suppliers and creditors. Although the parties agreed that their business relationship was initially very satisfactory, the relationship deteriorated from 1988 through 1990 because defendants became increasingly unable to repay their debt. Plaintiff eventually foreclosed on various mortgages and other security interests that it possessed in defendants’ property and equipment.
Ultimately, plaintiff initiated the instant suit seeking a deficiency judgment against defendants and the recovery of plaintiffs remaining collateral. In response, defendants filed a ten-count counterclaim seeking recovery from plaintiff on theories ranging from bad-faith breach of contract and breach of fiduciary duty to tortious interference with contract and fraud.
Regarding plaintiff’s complaint, the parties in July 1994 entered into a consent judgment for defendants’ deficiency. The judgment awarded plaintiff $249,458.81 plus interest and ordered defendants to surrender various items of farm equipment pledged as collateral.
With respect to the counterclaim, the trial court granted plaintiff’s motions for a directed verdict regarding several counts, including counts v (invalid foreclosure), vm (tortious interference), and x (fraud). The remaining claims proceeded to verdict. The jury returned verdicts for defendants in the amounts of $315,000 on count I (bad-faith refusal to advance to defendants 1991 operating funds) and $500,000 on combined counts H and vi (plaintiff’s bad-faith breach of contract and breach of fiduciary duty in refusing defendants’ January 2, 1990, request that it apply a portion of a crop-proceeds check to a mortgage held by the Federal Land Bank [flb], another creditor of defendants). The jury also found for defendants on count vn (plaintiff obtained May 1990 mortgage on a property known as the Partaka farm by duress), but awarded no damages on this count. However, the trial court set aside the jury’s verdict for defendants with regard to this count as inconsistent with the jury’s award of damages to defendants for the loss of the same real estate. Regarding the remaining counts m (bad-faith failure to lend funds for completion of grain-drying system), iv (bad-faith failure to lend funds for completion of grain storage bam), and IX (tortious interference), the jury found for plaintiff.
Pursuant to the parties’ agreement, the trial court reduced defendants’ award for loss of real estate by deducting from it the amount of outstanding liens and encumbrances on defendants’ property. Specifically, the trial court subtracted from defendants’ award $513,599.28 in liens, encumbrances, and taxes, resulting in a preinterest net judgment of $301,400.72 for defendants.
Defendants first contend that the trial court erred in granting plaintiff a directed verdict with regard to count v of defendants’ countercomplaint, which alleged that plaintiff did not have a valid mortgage on a property known as the Hudson farm, and therefore improperly foreclosed on this property. We review de novo the trial court’s grant of a directed verdict. Meagher v Wayne State Univ, 222 Mich App 700, 708; 565 NW2d 401 (1997). In reviewing the trial court’s ruling, we examine the testimony and all legitimate inferences that may be drawn in the light most favorable to the nonmoving party. Kubczak v Chemical Bank & Trust Co, 456 Mich 653, 663; 575 NW2d 745 (1998). Directed verdicts are appropriate only when no factual question exists with regard to which reasonable minds may differ. Meagher, supra.
Defendants argue that the trial court improperly granted plaintiff a directed verdict when a question of fact existed regarding the interpretation of a clause in the mortgage plaintiff held on the Hudson farm. The trial court concluded that the mortgage contained a clear and unambiguous future advance clause. Defendants insist that the trial court erred in refusing to entertain parol evidence, which, they allege, would have shown that the parties did not intend the mortgage document to represent the complete integration of their agreement, and which would have clarified that the parties intended the mortgage to secure repayment of only the original mortgage principal amount, not any future advances. Defendants alleged that they had satisfied the original mortgage principal amount and therefore plaintiffs foreclosure on the Hudson farm was invalid if the mortgage did not also cover its subsequent loans to defendants.
While the trial court erred in neglecting to consider the documents executed by the parties contemporaneously with the mortgage for the purpose of determining whether the mortgage represented a complete integration of the parties’ agreement, this error was harmless. A finding that the parties intended a written instrument to be a complete expression of their agreement concerning the matters covered is a prerequisite to the application of the parol evidence rule. NAG Enterprises, Inc v All State Industries, Inc, 407 Mich 407, 410; 285 NW2d 770 (1979). Extrinsic evidence of prior or contemporaneous agreements or negotiations is admissible as it bears on this threshold question whether the written instrument is such an integrated agreement. Id. In this case, the mortgage itself refers to supplementary documents evidencing plaintiff’s September 1982 $15,000 loan to defendants:
In consideration of the loan(s) by [plaintiff] to [defendants], and to secure the repayment of the loan(s) made by [plaintiff] to [defendants] in the aggregate principal sum of $15,000.00, together with interest thereon, evidenced by a Basic Loan Agreement between the parties or Promissory Note dated 9-3-82 and any Supplementary Loan Agreements or Promissory Notes (the Basic Loan Agreement, the Supplementary Loan Agreements and Promissory Notes are hereinafter collectively called “Loan Agreement”), and any renewals, extensions or modifications thereof, together with all other additional or future loans, advances or readvances heretofore or hereafter made by [plaintiff] to [defendants], together with interest thereon, and to secure the performance and observance by [defendants] of each and every term, covenant, agreement and condition contained herein or in the Loan Agreement, [defendants] do[] hereby mortgage, warrant, grant, convey and assign unto [plaintiff] . . . the following described real estate. . . . [Emphasis added.]
Defendants thus correctly suggest that the trial court erred to the extent that it declined to review a loan application, two supplementary loan agreements, and a notice of defendants’ right of rescission of the mortgage, executed together with the mortgage, to determine to what extent the parties intended the mortgage’s terms to govern their agreement.
However, the trial court did not err in granting plaintiff’s motion for a directed verdict because none of the contemporaneously executed documents cited by defendants contradicted the mortgage’s language regarding future advances. The supplementary loan agreements executed with the mortgage address only various loan disbursement and repayment terms and conditions. The notice of rescission acknowledges the mortgage transaction “dated September 3, 1982, in the amount of $15,050.00 between [plaintiff] and [defendants],” and informs defendants that they may rescind the mortgage within three business days. The loan application simply indicates that defendants wanted $15,000 in exchange for a mortgage, and proposes a repayment plan. While defendants claim that plaintiffs failure to check a box on the loan application marked “Open End” indicates that the parties did not intend the mortgage to secure future advances, absolutely nothing in either the loan application or the other contemporaneously executed documents referenced by defendants suggests the parties intended other than that the mortgage would secure future advances. The mortgage’s language securing future advances is clear, unambiguous, and uncontradicted by these other documents. Therefore, we conclude that the trial court properly interpreted the language as a matter of law, Meagher, supra at 721, and properly granted plaintiff’s motion for a directed verdict. Id. at 708 (directed verdict appropriate when no factual question exists).
Next, defendants raise several challenges to the trial court’s setoffs against their damages awards. Plaintiff’s cross appeal asserts that the trial court erred in denying its motions for judgment notwithstanding the verdict (jnov) regarding the jury’s verdicts for defendants. Because plaintiff’s cross appeal raises issues dispositive of defendants’ remaining arguments on appeal, we consider plaintiff’s arguments first.
Plaintiff contends that the trial court erred in denying its motion for jnov with regard to count I of defendants’ countercomplaint, which alleged that plaintiff, in bad faith, breached an agreement to lend defendants operating funds for the 1991 growing season. A motion for JNOV should be granted only when there was insufficient evidence presented to create an issue for the jury. Pontiac School Dist v Miller, Canfield, Paddock & Stone, 221 Mich App 602, 612; 563 NW2d 693 (1997), lv gtd in part 457 Mich 870 (1998). JNOV is improper where reasonable minds could differ with regard to issues of fact. Michigan Microtech, Inc v Federated Publications, Inc, 187 Mich App 178, 186; 466 NW2d 717 (1991). When deciding a motion for JNOV, a trial court must examine the testimony and all legitimate inferences that may be drawn therefrom in a light most favorable to the nonmoving party. McLemore v Detroit Receiving Hosp & Univ Medical Center, 196 Mich App 391, 395; 493 NW2d 441 (1992). This Court reviews de novo the trial court’s ruling on a motion for JNOV. Meagher, supra.
As a matter of law, defendants presented insufficient evidence from which a jury could have found that plaintiff, in bad faith, breached an agreement between the parties that it would finance defendants’ 1991 farming operations. In October 1990, loan officers of plaintiff visited defendants’ farm to contemplate restructuring defendants’ outstanding debt. Conflicting testimony was presented at trial concerning the specificity and definiteness of plaintiff’s alleged promise to lend 1991 operating funds. While lenders and borrowers frequently enter into preliminary discussions of whether a loan will be refinanced or further credit will be extended, neither general discussions of extending credit nor past renewals of credit should lead a borrower to reasonably believe that credit will be extended or renewed again and again. State Bank of Standish v Curry, 442 Mich 76, 87; 500 NW2d 104 (1993) (“Nor does a course of past dealing where there has been a pattern of renewal in itself amount to sufficient assent to continue dealing or that renewal will be indefinite.”). However, because in the context of reviewing plaintiffs motion for jnov we must examine the evidence and all its legitimate inferences in defendants’ favor, McLemore, supra, we conclude that defendants’ testimony that plaintiff in October 1990 promised to lend 1991 operating funds to the defaulted defendants on the condition that defendants hold an equipment auction that raised at least $40,000 created an issue of fact for the jury regarding the existence of an agreement to lend. Although defendants did not state that the parties had agreed at the October 1990 meeting to any of the material terms required for the formation of a valid contract, including the amount of the loan, the interest rate, the method of repayment, or the collateral securing the loan, id. at 88, we will assume that the jury derived these terms from the parties’ controlling Basic Loan Agreement and prior course of dealing, and, in the context of this motion for jnov, we will defer to the jury’s conclusions regarding these matters.
However, even assuming that the essential terms of the alleged agreement could be substantiated from the parties’ Basic Loan Agreement and course of dealing or lending history, defendants’ claim that plaintiff, in bad faith, refused to advance 1991 operating funds must still fail as a matter of law. The Basic Loan Agreement governing the parties’ various supplemental loans and disbursements, dated November 20, 1986, clearly authorizes plaintiff, in the event of defendants’ default, to refuse to lend or disburse additional money.
3.4 Conditions for Loans and Disbursements
Each of the following provisions shall condition the obligation of [plaintiff] to make loans and Loan Disbursements hereunder:
A. [Plaintiff] has the right to review the loan eligibility and credit worthiness of [defendants] before each loan and Loan Disbursement requested. If as the result of such review [plaintiff] deems itself insecure, or if it would become insecure by such loan or Loan Disbursement, then in [plaintiff]’s sole discretion, it need not make any further loan or Loan Disbursement hereunder.
* * *
6.0 Default
The occurrence of any of the following shall constitute a default by [defendants] in all loans outstanding hereunder which shall authorize and permit [Plaintiff] to (a) demand immediate payment of all Indebtedness hereunder, (b) refuse further loans and/or Loan Disbursements ....
A. Failure of [defendants] to comply with or perform any of the terms and conditions contained herein or in any mortgage, pledge, security agreement, supplementary loan agreement or other written document executed by [defendants] in connection herewith....
* * *
C. If [defendants] fail[] to pay all Indebtedness as and when demanded by [plaintiff] ....
D. If [defendants] [are] in default in any Indebtedness to [plaintiff] under any loan not otherwise governed by the terms hereof.
F. If [plaintiff] should at any time in good faith deem itself insecure.
Our review of the record indicates that by 1990 and 1991 defendants had undisputedly defaulted on outstanding loans, having missed payments on separate loan obligations despite several repayment extensions granted by plaintiff. Defendants had outstanding debt in October 1990, at the time plaintiff allegedly promised to supply defendants’ 1991 operating funds. According to the parties’ supplementary loan agreements of record, by the beginning of 1991 defendants owed $79,692.50 plus interest on loan #10003. Defendants also owed by the beginning of 1991 approximately $200,000 on loan #20001, the entirety of which had come due earlier in 1990 when defendants defaulted on an outstanding installment. In November 1990, plaintiff had granted defendants extensions on the repayments of loans #10003 and #20001, requiring payments of $89,440.88 on loan #10003 and $75,060.81 on loan #20001 by February 1, 1991. Defendants failed to make these payments. Thus, whatever the agreement regarding operating funds plaintiff may have made with defendants in October 1990, plaintiff’s refusal to lend or disburse 1991 operating funds was a proper exercise of a bargained-for right under the parties’ Basic Loan Agreement, ¶ 6.0. No applicable law would obligate plaintiff to advance defendants further operating funds despite defendants’ repeated breaches of their repayment obligations, breaches occurring both before and after plaintiff’s alleged promise to lend 1991 operating funds. In our view, plaintiff has not assumed a duty to continually and endlessly fund defendants’ operations. To perpetually bind a lender to the borrower in this manner, despite the lender’s clear denial of the assumption of such a responsibility, would certainly discourage the practice of financing, and we decline to impose this perpetual obligation on plaintiff when the parties’ contract clearly provides that they intended otherwise. Thus, because defendants had undisputedly defaulted on outstanding loans, the clear and unambiguous terms of the parties’ agreement relieved plaintiff of any obligation to lend defendants further operating funds for 1991.
Additionally, given defendants’ extreme debt and default, plaintiff’s 1991 refusal to provide further operating funds cannot as a matter of law constitute bad faith. See Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich 127, 136-137; 393 NW2d 161 (1986) (Good-faith denials, offers of compromise, or other honest errors of judgment are not sufficient to establish bad faith. Further, claims of bad faith cannot be based on negligence or bad judgment, as long as the actions were made honestly and without concealment. Bad faith is reflected by conduct that is arbitrary, reckless, indifferent, or that intentionally disregards the interests of the person to whom a duty is owed.). In light of defendants’ growing debt and missed repayments, plaintiff’s denial to advance more funds cannot be considered arbitrary. Because plaintiff’s refusal to loan further funds does not constitute bad faith as a matter of law, the jury should not have been permitted to address count I of defendants’ countercomplaint.
Plaintiff next argues that the trial court erred in denying its motion for jnov regarding count n of defendants’ countercomplaint, which alleged that plaintiff, in bad faith, refused to remit a portion of a crop-proceeds check, in which plaintiff held a security interest, to the Federal Land Bank to satisfy a mortgage payment owed by defendants. Plaintiff applied $71,191.54 of the $83,000 crop-proceeds check, which was made payable to plaintiff and defendants jointly, as repayment of the entire principal and interest balance on defendants’ 1989 operating loan, for which loan the crop proceeds constituted collateral. As a matter of law, plaintiff’s refusal to relinquish its baxgained-for rights in collateral does not qualify as bad faith.
The duty of good faith imposed upon contracting parties does not compel a lender to surrender rights which it has been given by statute or by the terms of its contract. Similarly, it cannot be said that a lender has violated a duty of good faith merely because it has negotiated terms of a loan which are favorable to itself. As such, a lender generally is not liable for harm caused to a borrower by refusing to advance additional funds, release collateral, or assist in obtaining additional loans from third persons. [Creeger Brick & Building Supply, Inc v Mid-State Bank & Trust Co, 385 Pa Super 30, 36-37; 560 A2d 151 (1989).]
See also Van Arnem Co v Manufacturers Hanover Leasing Corp, 776 F Supp 1220, 1223 (ED Mich, 1991) (A line of credit lender is not by definition “the borrower’s fiduciary. The lender remains entitled to advance its own interests by enforcement of contract terms, and is not required to forego enforcement of contract terms to put the borrower’s interests ahead of its own.”); Price v Wells Fargo Bank, 213 Cal App 3d 465, 479; 261 Cal Rptr 735 (1989) (Where the appellants argued “that the bank owed them a duty of reasonable forbearance in enforcing its creditor’s remedies,” the court found no authority supporting the appellants’ argument and explained that “ [contracts are enforceable at law according to their terms. The covenant of good faith . . . does not impose any affirmative duty of moderation in the enforcement of legal rights.”). Thus, we conclude that the trial court erred in denying plaintiff’s motion for jnov with regard to count n of defendants’ counterclaim.
Assuming arguendo that a valid contract to lend 1991 operating funds existed, that plaintiff, in bad faith, breached its obligation to lend, and that plaintiff, in bad faith, refused to relinquish collateral, we agree with plaintiff that defendants absolutely failed as a matter of law to establish support for the jury’s awards of damages resulting from plaintiff’s actions. The parties agreed at trial that defendants’ claims of breach of good faith were contractual in nature. Damages recoverable for breach of contract are those that arise naturally from the breach or those that were in the contemplation of the parties at the time the con tract was made. Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 414; 295 NW2d 50 (1980). Application of this principle in the commercial contract situation generally results in a limitation of damages to the monetary value of the contract had the breaching party fully performed under it. Id. at 414-415.
Regarding plaintiffs alleged failure to lend, defendants did not establish that this failure resulted in damages amounting to the $315,000 that the jury awarded. A party to a contract who is injured by another’s breach of the contract is entitled to recover from the latter damages for only such injuries as are the direct, natural, and proximate result of the breach. Stewart v Rudner, 349 Mich 459, 468-469; 84 NW2d 816 (1957). Defendants admitted that they obtained alternate financing for their 1991 farming operations from a neighbor. Therefore, plaintiff’s alleged failure to lend did not proximately result in defendants suffering any damages beyond whatever limited, incidental expense they incurred in securing the alternate financing, and certainly no damages remotely approaching the $315,000 awarded by the jury.
Regarding plaintiff’s alleged bad-faith refusal to surrender its collateral to the Federal Land Bank, defendants also failed to introduce support for the jury’s verdict awarding them damages of $500,000 on this count. The Federal Land Bank extended until February 1, 1991, the due dates of both defendants’ January 1, 1990, and January 1, 1991, mortgage payments, but defendants still failed to make the payments. Thus, where defendants’ own inaction intervened, no legal causation exists between plaintiff’s refusal and the eventual foreclosure on defendants’ property. Furthermore, defendants admitted that they could have borrowed money and paid the Federal Land Bank themselves. Therefore, defendants’ failure to mitigate any damages allegedly caused by plaintiff’s refusal also precludes the jury’s $500,000 award of damages. See M & V Barocas v THC, Inc, 216 Mich App 447, 449; 549 NW2d 86 (1996) (It has long been recognized that the law should encourage a potential plaintiff to take reasonable actions to minimize the extent of damages arising from the wrongful breach of a contract.). As the Michigan Supreme Court long ago explained, “The law is well settled that a case should not be submitted to the jury where a verdict must rest upon a conjecture or guess.” Scott v Boyne City, G & AR Co, 169 Mich 265, 272; 135 NW 110 (1912). Because the jury was permitted in the instant case to speculate regarding the existence of a contract, whether plaintiff acted in bad faith or illegally, and regarding the amount of damages defendants allegedly suffered, we conclude that the trial court erred in denying plaintiff’s motions for JNOV regarding counts I and n of defendants’ countercomplaint.
Plaintiff further challenges the trial court’s denial of its motion for JNOV regarding count vi of defendants’ countercomplaint alleging that plaintiff owed defendants a fiduciary duty and breached it by refusing defendants’ request that it remit crop proceeds to the Federal Land Bank. A fiduciary relationship, which generally does not arise within the lender-borrower context, exists when there is a reposing of faith, confidence, and trust and the placing of reliance by one on the judgment and advice of another. Ulrich v Federal Land Bank of St Paul, 192 Mich App 194, 196-197; 480 NW2d 910 (1991); Smith v Saginaw Savings & Loan Ass’n, 94 Mich App 263, 274; 288 NW2d 613 (1979). The mere facts that plaintiff as the lender maintained control over the terms of defendants’ loan repayment or participated in discussions regarding what crops to grow and how much money defendants would need to borrow at various times are insufficient as a matter of law to establish a fiduciary relationship between plaintiff lender and defendant borrowers. See Ulrich, supra (The borrower’s allegations of inexperience and reliance on the lender are insufficient to establish a fiduciary relationship.). The testimony of plaintiffs former loan officer and defendants revealed that defendants exercised ultimate control over the operation of their farm, including determining what land to rent and purchase, what equipment to purchase, in what land to plant crops, the nature and amount of each crop to grow, when and to whom to sell the crops, and other business-related decisions, and that no profit-sharing occurred between defendants and plaintiff. Because the record reflects no evidence supporting the existence of a fiduciary relationship between plaintiff and defendants beyond the ordinary lender-borrower relationship, the trial court should have granted plaintiffs motion for JNOV regarding this claim.
Plaintiff finally claims that the trial court should have additionally granted its motion for JNOV regarding defendants’ claim that plaintiff by duress obtained a mortgage on one of defendants’ farms. This Court has explained that
[t]o succeed with respect to a claim of duress, [defendants] must establish that they were illegally compelled or coerced to act by fear of serious injury to their persons, reputations, or fortunes. “Fear of financial ruin alone is insufficient to establish economic duress; it must also be established that the person applying the coercion acted unlawfully.” [Enzymes of America, Inc v Deloitte, Haskins & Sells, 207 Mich App 28, 35; 523 NW2d 810 (1994), rev’d in part on other grounds 450 Mich 889 (1995) (citations omitted).]
Because defendants have not alleged that plaintiff acted illegally, their claim of duress is meritless, and we conclude that the trial court erred in allowing it to proceed to the jury.
Given our conclusion affirming the trial court’s grant of plaintiff’s motion for a directed verdict regarding count v of defendants’ countercomplaint, and our conclusions reversing the trial court’s denials of plaintiff’s motions for a directed verdict regarding counts i, n, vi, and vn of defendants’ countercomplaint, we need not reach defendants’ various remaining allegations that the trial court erred in calculating setoffs to their jury awards. We simply note the following in response to defendants’ argument that the trial court erred in determining that a breach of contract by plaintiff lender that caused defendants to lose certain property would entitle defendants to recover only the amount of their loss of equity in the property — the property’s market value on the foreclosure date less expenses saved because of foreclosure. United California Bank v Prudential Ins Co of America, 140 Ariz 238, 295-296, 308-309; 681 P2d 390 (1983). While “[t]he traditional measure of damages for breach of a contract to loan money is the additional interest required for a replacement loan. . . . [T]his measure has been broadened to include loss of equity if the breach of the loan agreement caused the borrower to lose ownership of its assets.” Id. at 295-296.
It is only “the actual loss” in the given case that can be recovered by the landowner. That measures the amount of his damages. Where there is a lien indebtedness against the land the indebtedness must be taken into consideration in determining the amount of “actual loss” the landowner sustained at the time the title was lost. The landowner, owing such lien indebtedness, must pay it, and is bound to pay it. He is not legally relieved of its final payment by the mere act of the party defaulting in lending the money to discharge the lien indebtedness. Consequently, in such cases, the measure of liability is the difference in the lien indebtedness, principal and interest, and the value of the land at the time it is lost by reason of foreclosure of such hen. It is the landowner’s interest in the land, represented by the value of his equity, that he would be entitled to as compensation. For legally the value of the equity is his only “actual loss.” [FB Collins Inv Co v Sallas, 260 SW 261, 265 (Tex App, 1924).]
See also Lincor Contractors, Ltd v Hyskell, 39 Wash App 317, 321-322; 692 P2d 903 (1984) (financing company’s refusal to lend entitled property owner to recover value of its equity in building); St Paul at Chase Corp v Manufacturers Life Ins Co, 262 Md 192, 241-244; 278 A2d 12 (1971) (breaching party’s refusal to finance entitled property owner to recover for loss of equity, but because owner had no equity it could recover no damages for loss of building).
Defendants additionally challenge the trial court’s decision to award plaintiff attorney fees and costs, alleging that plaintiff should not be entitled to fees and costs when it breached its contractual duties. However, in light of our conclusions reversing the jury’s verdicts for defendants, defendants’ argument is without merit. Furthermore, in stipulating judgment for plaintiff on its complaint, defendants on the record agreed that plaintiff would receive attorney fees in an amount to be later determined by the trial court. Because error requiring reversal cannot be error to which the aggrieved party contributed by plan or negligence, defendants have waived our review of this issue. Phinney v Perlmutter, 222 Mich App 513, 537; 564 NW2d 532 (1997).
Finally, defendants argue that several rulings of the trial court illustrate that it was biased against them. Our review of these various, brief contentions, however, reveals no improper actions taken by the trial court, and no unfair prejudice suffered by defendants.
Affirmed in part, reversed in part, and remanded for entry of judgment for plaintiff regarding counts I, n, vi, and vn of defendants’ countercomplaint. We do not retain jurisdiction.
Doctoroff, J., concurred.
The parties executed and recorded on June 20, 1985, a document entitled “Affidavit Correcting Mortgage.” This affidavit provided that the September 3, 1982, date of the Basic Loan Agreement referenced in the mortgage was inaccurate and that the date should read April 30, 1984. This correction reflects the parties’ execution of a new Basic Loan Agreement on April 30, 1984, but does not affect our instant analysis.
The record contains an April 14, 1989, supplementary loan agreement coveting a $50,532.50 operating loan (denominated as loan #2) disbursement that requires this amount plus interest be repaid by February 1, 1990. However, a December 31, 1989, statement of defendants’ accounts reflects a balance for loan #2 of $66,246.50, indicating that defendants borrowed more operational funds for 1989 than reflected in the April 14 supplementary loan agreement. Although the record was unclear regarding on what specific date loan #2’s balance above $50,532.50 plus interest was due, as discussed above, we find that plaintiff did not act in bad faith in utilizing its collateral to satisfy in its entirety defendants’ 1989 operating loan. Furthermore, a November 30, 1989, supplementary loan agreement shows that defendants also owed as of January 1, 1990, a $20,000 plus interest payment on the $195,188.65 balance of their capital loan (loan #20001). Therefore, because the $83,000 crop-proceeds check was insufficient to satisfy all of defendants’ loan obligations, plaintiff exercised sound lending practice in refusing to advance $10,000 to the Federal Land Bank. | [
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Wahls, P.J.
In this age discrimination and conversion action, defendants appeal by leave granted from an order denying their motion to compel arbitration. We reverse.
The facts of the underlying lawsuit are not at issue on appeal. Essentially, plaintiff worked for defendant Coopers & Lybrand, L.L.P., for over thirty years before he was terminated. Plaintiff then filed suit alleging that his termination was the product of age discrimination and that defendants wrongfully converted his former clients. It is undisputed that plaintiff signed an arbitration agreement in which he agreed to arbitrate certain claims against defendant Coopers & Lybrand. In response to plaintiffs complaint, defendants filed a motion to compel arbitration. The trial court denied defendants’ motion without explanation. We granted defendants’ subsequent application for leave to appeal.
Before addressing the trial court’s decision to deny defendants’ motion to compel arbitration, we must address a procedural matter. Defendants did not originally file an answer to plaintiffs complaint. Instead, they filed their motion to compel arbitration, and, when their motion was denied, filed an application for leave to appeal. After defendants filed their application, plaintiff moved for entry of a default and entered a default below. Plaintiff then filed a motion to dismiss defendants’ application for leave to appeal, arguing that, after the default, the court rules prohibited defendants from pursuing their appeal. In lieu of deciding plaintiff’s motion to dismiss, this Court granted the application for leave to appeal and instructed the parties to address the issue in their appellate briefs. Having reviewed plaintiff’s argument, we conclude that he misinterprets the court rules.
Generally, a defendant “must serve and file an answer or take other action permitted by law or these rules within 21 days after being served . . . .” MCR 2.108(A)(1). However,
[w]hen a motion ... is filed, the time for pleading set in [MCR 2.108(A)] is altered as follows, unless a different time is set by the court:
(1) If a motion under MCR 2.116 made before filing a responsive pleading is denied, the moving party must serve and file a responsive pleading within 21 days after notice of the denial. However, if the moving party, within 21 days, files an application for leave to appeal from the order, the time is extended until 21 days after the denial of the application unless the appellate court orders otherwise. [MCR 2.108(C)(1).]
Here, despite plaintiff’s protestations, defendants’ motion to compel arbitration was a motion under MCR 2.116. See MCR 2.116(C)(7). Thus, once defendants filed a timely application for leave to appeal, the time for filing an answer was extended until after the application was resolved. Under these circumstances, plaintiffs entry of a default was improper, and we decline to dismiss defendants’ appeal.
Defendants raise only one issue on appeal. They argue that plaintiff signed a “Partners and Principals Agreement” containing a valid arbitration clause and, therefore, that the trial court erred in denying their motion to compel arbitration. We agree.
We review a trial court’s grant or denial of a motion for summary disposition pursuant to MCR 2.116(C)(7) de novo to determine whether the moving party was entitled to judgment as a matter of law. Limbach v Oakland Co Bd of Co Rd Comm’rs, 226 Mich App 389, 395; 573 NW2d 336 (1997). The Federal Arbitration Act (faa), 9 USC 1-15, governs actions in both federal and state courts arising out of contracts involving interstate commerce. Burns v Olde Discount Corp, 212 Mich App 576, 580; 538 NW2d 686 (1995). To ascertain the arbitrability of an issue, a court must consider whether there is an arbitration provision in the parties’ contract, whether the disputed issue is arguably within the arbitration clause, and whether the dispute is expressly exempt from arbitration by the terms of the contract. Id. Any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Id.
Here, plaintiff signed a Partners and Principals Agreement that included the following arbitration clause:
Any claim or controversy not specifically provided for in Section 12.2[ 1 arising out of the provisions of this Agreement, the interpretation thereof, or the practice, business or affairs of the Firm shall be settled by arbitration in New York, New York, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered upon the award granted in such arbitration and such award may be enforced in any court having jurisdiction.
Another clause states that the agreement “shall be governed by the laws of the State of New York.”
Defendants rely on the FAA for the proposition that the arbitration clause in the Partners and Principals Agreement is enforceable. Specifically, they rely on 9 USC 2, which states:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
Plaintiff argues that the faa does not apply, citing 9 USC 1, which defines the term “commerce.” That section provides, in part: “[N]othing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Defendants respond that the Partners and Principals Agreement is not an employment contract and that, even if it is, it is not a contract of a “class of workers engaged in foreign or interstate commerce.” We believe that defendants have the better argument.
State courts are bound, under the Supremacy Clause, US Const, art VI, cl 2, to enforce the faa’s substantive provisions. Kauffman v Chicago Corp, 187 Mich App 284, 286; 466 NW2d 726 (1991). While there is some disagreement in the federal courts regarding the scope of the exclusionary language in 9 USC 1, it seems clear to us that it does not apply to the Partners and Principals Agreement in this case. Plaintiff simply cannot show that the agreement was a contract of employment of a “class of workers engaged in foreign or interstate commerce.”
We have not found any Michigan cases addressing the scope of the exclusionary provision in 9 USC 1. However, the Sixth Circuit Court of Appeals has adopted a narrow construction of that clause. Asplundh Tree Expert Co v Bates, 71 F3d 592, 600-601 (CA 6, 1995). After a lengthy review of other cases, the court summarized its analysis:
We conclude that the exclusionary clause of § 1 of the Arbitration Act should be narrowly construed to apply to employment contracts of seamen, railroad workers, and any other class of workers actually engaged in the movement of goods in interstate commerce in the same way that seamen and railroad workers are. We believe this interpretation comports with the actual language of the statute and the apparent intent of the Congress which enacted it. The meaning of the phrase “workers engaged in foreign or interstate commerce” is illustrated by the context in which it is used, particularly the two specific examples given, seamen and railroad employees, those being two classes of employees engaged in the movement of goods in commerce. [2&]
We find the reasoning in Asplundh persuasive, and we adopt it as our own. Thus, we conclude that the exclusionary provision in 9 USC 1 is limited to employees directly engaged in the movement of goods in interstate commerce. Clearly, plaintiff is not such an employee, and the exclusionary provision does not apply to the Partners and Principals Agreement in this case.
Plaintiff also argues that his claims are outside the scope of the agreement to arbitrate. Plaintiffs argument can succeed only if we adopt a very narrow reading of the arbitration clause. This, we decline to do. As noted above, any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Here, the parties agreed to arbitrate claims “arising out of . . . the practice, business or affairs of the Firm . . . Plaintiffs claims are arguably covered by this language, and, resolving any doubts in favor of arbitration, the trial court should have granted defendants’ motion to compel arbitration.
Plaintiff also asserts that he did not knowingly and voluntarily agree to arbitrate these claims. His argument rests on an opinion from the Ninth Circuit Court of Appeals, Prudential Ins Co of America v Lai, 42 F3d 1299 (CA 9, 1994), where the court concluded that an arbitration clause is not binding unless the plaintiffs “knowingly contract to forego their statutory remedies in favor of arbitration.” Id. at 1305. With due respect to the Ninth Circuit Court of Appeals, there is nothing in the language of the faa to support a “knowledge” requirement. Under the faa, an arbitration clause “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 USC 2 (emphasis added). Thus, an arbitration clause is enforceable, regardless of whether a plaintiff is specifically aware of its scope, unless the plaintiff can show grounds for revocation. See Beauchamp v Great West Life Assurance Co, 918 F Supp 1091 (ED Mich, 1996). Here, plaintiff has not asserted any grounds for revocation of the Partners and Principals Agreement, and the arbitration clause is enforceable.
Finally, plaintiff argues that the arbitration agreement violates Michigan public policy. Plaintiff relies on an opinion by Justice Cavanagh in Heurtebise v Reliable Business Computers, Inc, 452 Mich 405; 550 NW2d 243 (1996), and on two subsequent cases from this Court, Rushton v Meijer, Inc (On Remand), 225 Mich App 156; 570 NW2d 271 (1997), and Rembert v Ryan’s Family Steakhouse, Inc, 226 Mich App 821; 575 NW2d 287 (1997). However, the faa did not apply in any of these cases. Heurtebise, supra at 419; Rush-ton, supra at 166; Rembert, supra at 825. This is a crucial distinction, because application of the faa implicates the Supremacy Clause, which precludes us from applying our state constitution or laws to defeat federal legislation. US Const, art VI, cl 2. Thus, as the United States Supreme Court has held, where the faa applies, it preempts any state law or policy that specifically invalidates arbitration agreements. Doctor’s Associates, Inc v Casarotto, 517 US 681, 686-688; 116 S Ct 1652; 134 L Ed 2d 902 (1996). The Michigan public policy cited by Justice Cavanagh in Heurtebise would specifically invalidate prospective arbitration clauses to the extent they apply to civil rights claims. Because the faa applies in this case, this public policy is clearly preempted, and plaintiff’s argument must fail.
Because plaintiff’s claims were subject to a valid and enforceable arbitration agreement under the FAA, the trial court erred in denying defendants’ motion to compel arbitration.
Reversed.
The fact that the motion was not labeled as one for summary disposition under MCR 2.116(C)(7) is irrelevant. MCR 2.116(C)(7) authorized the motion, regardless of how it was labeled.
Alternatively, even if plaintiff’s entry of a default had been proper, plaintiff has not cited anything in the court rules suggesting that a default divests this Court of jurisdiction to consider a properly filed application for leave to appeal.
The parties appear to agree that § 12.2 does not apply to plaintiffs claims.
The parties also dispute whether the Partners and Principals Agreement is a “contract of employment” at all. Because it is clear that plaintiff is not a member of a class of workers engaged in foreign or interstate commerce, we need not address this issue.
We agree with the sentiments expressed by the court in Beauchamp, supra at 1096, 1098:
Fortunately, Prudential is not binding precedent because this court is not persuaded by its reasoning. The portions of the legislative history relied upon by the Ninth Circuit are slender reeds upon which to rest the weighty and novel conclusion that an arbitration clause is only binding when the claimant has actual knowledge that his particular employment discrimination claims will be covered by the agreement. This conclusion flies in the face of the language of the Civil Rights Act of 1991, the Supreme Court’s opinion in Gilmer [v Interstate/Johnson Lane Corp, 500 US 20; 111 S Ct 1647; 114 L Ed 2d 26 (1991)], and fundamental principles of contract law.
* ** *
Accordingly, this court chooses not to treat Prudential as persuasive precedent, instead holding, consistently with Gilmer, that a party is generally chargeable with knowledge of the existence and scope of an arbitration clause within a document signed by that party, in the absence of fraud, deception, or other misconduct that would excuse the lack of such knowledge.
We note that Justice Cavanagh’s opinion in Heurtebise was not binding on us initially, because it was signed by only three justices. However, the panel in Rushton adopted Justice Cavanagh’s opinion, making it binding on subsequent panels pursuant to MCR 7.215(H)(1). When the panel in Rembert addressed this issue, it declared a conflict with Rushton, pursuant to MCR 7.215(H)(2). The Rembert panel would have concluded that prospective arbitration agreements in employment contracts are not barred by public policy. Rembert, supra at 822-823. The opinion in Rembert has since been vacated, and a conflict panel has been convened. Id. at 821-822. However, the conflict panel has not yet issued a decision.
As the Court noted in Doctor’s Associates, state laws governing contracts in general do not conflict with the faa simply because they also affect arbitration contracts. Such laws are not preempted. Doctor’s Associates, supra at 686-687.
Defendants also argue that Michigan public policy is inapplicable because New York law governs the agreement. Having concluded that federal law preempts Michigan public policy, we need not address this issue. | [
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Smolensk, J.
Defendant city of East Lansing appeals as of right a final order granting declaratory and injunctive relief in favor of plaintiff Adams Outdoor Advertising. We affirm in part, reverse in part, and remand.
Adams is a company engaged in the business of owning off-premises billboards and leasing the space on these billboards for advertising purposes. In East Lansing, Adams has billboards placed at three different locations. Specifically, at 111 North Harrison and 1108 East Grand River, Adams has three and two, respectively, billboards located on building rooftops pursuant to leases. And, on a narrow strip of property owned by Adams at 1502 West Grand River (the Point), Adams has a total of seven sign faces on five freestanding billboards. All the free-standing billboards at the Point measure twelve feet by twenty-five feet (three hundred square feet) except for one “rotary” or “bulletin” billboard, which measures fourteen feet by forty-eight feet.
In 1975, East Lansing adopted a comprehensive sign code. Under the code, Adams’ previously lawful rooftop and freestanding billboards became nonconforming. Specifically, Adams’ rooftop billboards were prohibited by the code. The seven sign faces at the Point exceeded the number of signs permitted at this location under the code and violated the code’s spacing and setback requirements. In addition, the rotary billboard at the Point exceeded the code’s height and three hundred square foot maximum display area requirements. Subsection 8.39(8) of the code, as subsequently amended, gave Adams until May 1, 1987, to eliminate its nonconforming signs:
8.39 Alterations to Signs. Any existing sign on the effective date of this Chapter or any amendment hereto, which does not at that time comply with all of the provisions hereof, including any amendment:
* * *
(8) Shall not be placed, maintained, or displayed by any person on or after May 1, 1987.
The code did not provide for the payment of any compensation for the removal of Adams’ nonconforming billboards.
In early 1987, East Lansing informed Adams that it would be cited for a violation if its nonconforming signs were still in place after the May 1, 1987, deadline. After Adams applied for and was denied a variance by East Lansing’s Building Board of Appeals, Adams and others filed suit against East Lansing, seeking declaratory and injunctive relief.
As relevant to this case, Adams contended that subsection 8.39(8) was enacted without statutory authority and constituted a taking without just compensation. The trial court subsequently found that subsection 8.39(8) was enacted without legislative authority and granted Adams’ motion for partial summary disposition. This Court affirmed. Adams Outdoor Advertising v East Lansing, unpublished opinion per curiam, decided April 20, 1990 (Docket Nos. 110816-110818).
In Adams Outdoor Advertising v East Lansing, 439 Mich 209, 212, 219; 483 NW2d 38 (1992) (Adams I), our Supreme Court reversed the decision of this Court on the ground that East Lansing had the authority under subsection 4i(5) of the home rule city act, MCL 117.4i(5); MSA 5.2082(5), to enact its sign code, including subsection 8.39(8). The Court remanded to the trial court to resolve the taking issue.
On remand, the taking issue proceeded to a trial. At the outset of the trial, the court initially ruled that subsection 8.39(8), as applied to Adams’ rooftop billboards, constituted a taking because Adams was deprived “of all economically viable use of the property . . . .” The court ruled that it would defer its ruling with respect to Adams’ freestanding billboards at the Point until it heard the evidence with respect to the amount of economic loss that Adams would sustain at this location as a result of complying with the sign code.
Although emphasizing that East Lansing had not offered to pay any compensation and that Adams was not seeking any compensation but, rather, was seeking a ruling regarding the enforceability of subsection 8.39(8), Adams offered the testimony of an expert in the appraisal of off-premises billboards for the purpose of establishing the amount of economic loss that it would sustain. Adams’ expert testified that he had used the income capitalization method to arrive at an estimated value of each of Adams’ three sign locations in East Lansing as of November 1996. With respect to the Point, the expert testified that he estimated that the present gross income for the seven sign faces at the Point was approximately $64,500, with a significant portion of this figure (approximately $33,000) attributable to the income produced by the rotary billboard. The expert testified that he understood that under the code Adams would still be permitted to maintain four sign faces at the Point. The expert testified that in going from seven sign faces to four sign faces Adams would lose approximately $44,500 in gross income, which, after applying a 32.6 percent expense ratio (approximately $14,500 in estimated expenses), yielded a loss of $30,000 in net income. The expert testified that $30,000 net income capitalized at a ten percent rate of return yielded an estimated loss at the Point of $300,000. The expert testified that he estimated that the value of the losses that Adams would incur at 111 North Harrison and 1108 East Grand River was $57,500 and $55,000 respectively.
Following the proofs, the court ruled that subsection 8.39(8), as applied to the billboards located at the Point, constituted a taking. Reducing the capitaliza tion rate from ten percent to seven percent, the court determined that the loss to Adams at the Point, 111 North Harrison, and 1108 East Grand River was $200,000, $40,250, and $38,500, respectively. The court subsequently entered a final order (1) declaring that subsection 8.39(8), as applied to Adams’ billboards, constituted a taking of Adams’ property without just compensation in violation of the United States and Michigan Constitutions, and (2) permanently enjoining East Lansing from enforcing subsection 8.39(8) against Adams. East Lansing appeals as of right from this order.
On appeal, East Lansing raises numerous grounds in support of its contention that the trial court erred in determining that subsection 8.39(8), as applied to Adams’ billboards, constitutes a taking. Specifically, East Lansing argues that no taking has occurred because the billboards are personal property and the United States Supreme Court has recognized that “in the case of personal property, by reason of the State’s traditionally high degree of control over commercial dealings, [an owner] ought to be aware of the possibility that new regulation might even render his property economicaUy worthless . ...” Lucas v South Carolina Coastal Council, 505 US 1003, 1027-1028; 112 S Ct 2886; 120 L Ed 2d 798 (1992). This argument demonstrates the importance of precisely identifying the property interest claimed to have been taken.
In In re Acquisition of Billboard Leases & Easements, 205 Mich App 659, 661; 517 NW2d 872 (1994), governmental entities had condemned not only billboards but also leaseholds on which the billboards were located. The issue on appeal to this Court was the determination of just compensation for these property interests. Id. With respect to the condemned billboards, there was no dispute that just compensation was owed for their full value, and the parties apparently agreed that “this can be determined by estimating the cost of the billboards as ‘new less depreciation.’ ” Id. at 661, n 1. With respect to the leaseholds on which the billboards were located, this Court recognized that “[r]egardless of whether a billboard is classified as personal property or a fixture, the leaseholds and air rights that were taken from defendants are real property. This Court has previously held that income capitalization is a proper method of estimating the value of income-producing real property.” Id. at 662.
In Adams’ trial brief in this case, Adams specifically relied on Acquisition of Leases for its assertions that the billboards were income-producing real property and that the income capitalization method was the proper method for determining the value of this property. At the outset of the trial, the court ruled as follows:
The Court finds no merit to Defendant’s assertion that there is no right to compensation for leasehold interests such as those possessed by Adams Outdoor Advertising....
As to the proper method of calculating the amount of compensation, the Court finds that the income capitalization method, that is the present value [sic] the future cash flows, is the proper method to be employed.
In light of these rulings and this Court’s decision in Acquisition of Leases, supra, Adams then successfully moved to have excluded from evidence exhibits pertaining to the cost and depreciation of the billboards, which, we note, would be relevant in establishing the value of the billboards themselves. See Acquisition of Leases, supra at 661, n 1.
Thus, despite whatever imprecise characterizations have been used in this case, i.e., that the property taken by subsection 8.39(8) is Adams’ “billboards,” a review of the record makes it abundantly clear that this case was tried on the theory that the property interests claimed to have been taken by East Lansing’s sign code are Adams’ real property interests, whether leasehold or fee simple, in the places where its billboards are located. East Lansing’s argument that no taking occurred because the billboards are personal property misapprehends the nature of the property interests claimed to have been taken in this case and is therefore rejected.
Next, East Lansing contends that our Supreme Court’s decision in Adams I makes clear that its power to regulate billboards under the home rule city act is not limited to the same extent that its power to zone is restricted under the zoning enabling act, MCL 125.581 et seq.) MSA 5.2931 et seq., with respect to nonconforming uses. We agree. See Adams I, supra at 216-217. East Lansing also contends that its sign code, which was enacted for safety and aesthetic reasons, is a valid exercise of its police power and that Adams is not immune from these ordinances. Again, we have no quarrel with this proposition. See Queenside Hills Realty Co, Inc v Saxl, 328 US 80, 83; 66 S Ct 850; 90 L Ed 1096 (1946). East Lansing thus con- eludes that it can enforce its sign code against Adams even if it means the complete elimination of off-premises advertising and that no claim of a taking can be sustained. We cannot agree with this conclusion. Rather, “ ‘[t]he general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.’ ” K&K Constr, Inc v Dep’t of Natural Resources, 456 Mich 570, 576; 575 NW2d 531 (1998) (quoting Pennsylvania Coal Co v Mahon, 260 US 393, 415; 43 S Ct 158; 67 L Ed 322 [1922]). More specifically, even if a land use regulation substantially advances a legitimate state interest, a taking may be found where “the regulation denies an owner economically viable use of his land.” K&K, supra at 576. Thus, we reject East Lansing’s argument that it can enforce its sign code against Adams and no claim of a taking can be maintained. In other words, even though East Lansing has the legislative authority to enact its sign code and even though the code has a valid police power purpose, if the code goes too far in regulating Adams’ use of its real property, a taking for which compensation is due will be recognized. K&K, supra.
Next, East Lansing contends that subsection 8.39(8) does not constitute a taking as applied to Adams’ signs because Adams was given a reasonable period to comply with the sign code and recover its investment. In making this argument, East Lansing relies on Art Neon Co v City & Co of Denver, 488 F2d 118 (CA 10, 1973), and other cases that have found that ordinances analogous to subsection 8.39(8) do not constitute a taking of property without just compensation. However, in Adams I, supra at 234-237, Justice Levin, in a separate opinion, rejected the rationale of these cases:
The courts approving amortization! 1 as a reasonable imposition on private property rights have based their conclusions upon policy arguments of dubious merit. Further, the authorities to the contrary, while less numerous, are more persuasive.
Authorities holding that amortization is constitutionally permissible invariably begin by acknowledging the principle that nonconforming uses are not subject to immediate termination.1 1 Zoning enactments have traditionally been prospective in effect, partly in the expectation, it has been said, “that existing nonconforming rises would be of little consequence and . . . would eventually disappear.” But, as a commentator observed, “the number of nonconforming uses did not decrease, but rather increased due to indifferent or unsympathetic administration of the zoning ordinances, incorrect granting of variances, and influential political pressures.”
The impetus for amortization may be communal frustration with how long it has taken nonconforming uses to “eliminate themselves.” The Supreme Court of Missouri [in Hoffmann v Kinealy, 389 SW2d 745, 750 (Mo, 1965)] explained that some communities have addressed the problem of persistent, nonconforming uses by recourse to legislative legerdemain:
“[ZJoning zealots have been casting about for other methods or techniques to hasten the elimination of nonconforming uses. In so doing, only infrequent use has been made of the power of eminent domain, primarily because of the expense of compensating damaged property owners, but increasing emphasis has been placed upon the amortization or tolerance technique which conveniently bypasses the troublesome element of compensation.”
Courts in states passing favorably on amortization “reason” that, where the private loss to property owners is outweighed by the public benefit of amortizing nonconforming uses, there is no constitutional difficulty if the period of amortization is reasonable.1 1 A reasonable amortization period has been said to be one that allows affected property owners adequate time to recover their investment. In this connection, reference is sometimes made to the economic life of the property, such as a “depreciation” period, either in financial accounting or tax accounting terms.1 1
While a community is surely empowered to exercise police power in furtherance of public heath, safety, and general welfare, and “[e]very exercise of the police power is apt to affect adversely the property interest of somebody,” the notion that the right or need of the community to exercise its police power may somehow “outweigh” private property interests runs counter to the constitutional limitation requiring payment of just compensation for a taking.
The introduction of a temporal component does not alter the analysis. As the court in [Hoffmann, supra at 753] said:
“To our knowledge, no one has, as yet, been so brash as to contend that such a pre-existing lawful nonconforming use properly might be terminated immediately. In fact, the contrary is implicit in the amortization technique itself which would validate a taking presently unconstitutional by the simple expedient of postponing such taking for a ‘reasonable’ time. All of this leads us to suggest, as did the three dissenting justices in Harbison v City of Buffalo [4 NY2d 553, 566-567; 176 NYS2d 598; 152 NE2d 42 (1958)], that it would be a strange and novel doctrine indeed which would approve a municipality taking private property for public use without compensation if the property was not too valuable and the taking was not too soon, and prompts us to repeat the caveat of Mr. Justice Holmes in [Pennsylvania Coal, supra at 416], that ‘[w]e are in danger of for getting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.’ ”
The application of “generally accepted accounting principles” in this context is unpersuasive. No reasonable person would seriously suggest that the owner of the Empire State Building could be required, in the exercise of the police power, to remove the building from the land, or even to rebuild it to current specifications, at the conclusion of a thirty- or fifty-year period mandated pursuant to the Internal Revenue Code as representing the useful life of buildings for tax depreciation purposes, without paying just compensation. [Citations omitted.]
Justice Levin also noted:
A further factor sometimes taken into account in calculation of a reasonable amortization period is whether the affected property owner, by virtue of the prospective ban on the similar use of property by other owners in the community, receives the benefit of a temporary “monopoly” on the nonconforming use. The implicit assumption of this analysis is that the community has a greater right to deprive persons of the use and enjoyment of their property if the community has taken action that indirectly enhances the value of such property.
This argument, like the balance of the analysis applied by the courts finding that amortization does not effect a taking, overlooks the principle that unless a property right is at the outset insubstantial, neither the state nor local governmental units to which the state delegates police power may deprive persons of the use and enjoyment of their property without paying just compensation. The gratuitous, and assertedly fortuitous effects, if any, of “monopoly” do not alter this principle. [Adams I, supra at 236, n 47.]
Justice Levin’s separate opinion in Adams I did not command a majority of the justices and therefore is not binding on this Court. Butterworth Hosp v Farm Bureau Ins Co, 225 Mich App 244, 248; 570 NW2d 304 (1997). Nevertheless, we find Justice Levin’s opinion persuasive and adopt it as our own. Thus, for the reasons expressed in Justice Levin’s opinion, we reject East Lansing’s contention that subsection 8.39(8), as applied to Adams’ billboards, does not constitute a taking because Adams has been given a reasonable period to comply with the ordinance and recover a substantial return on its investment.
Next, East Lansing contends that no claim of a taking can be sustained in this case because enforcement of subsection 8.39(8) against Adams’ off-premises billboards does not deny Adams all economically beneficial use of its property.
As indicated previously, the property interests claimed to have been taken in this case are real property interests. Thus, we find the appropriate analysis enunciated in K&K, supra at 576-577 (citations omitted):
The United States Supreme Court has recognized that the government may effectively “take” a person’s property by overburdening that property with regulations. . . . While all taking cases require a case-specific inquiry, courts have found that land use regulations effectuate a taking in two general situations: (1) where the regulation does not substantially advance a legitimate state interest, or (2) where the regulation denies an owner economically viable use of his land.
The second type of taking, where the regulation denies an owner of economically viable use of land, is further subdivided into two situations: (a) a “categorical” taking, where the owner is deprived of “all economically beneficial or productive use of land,” or (b) a taking recognized on the basis of the application of the traditional “balancing test” established in [Penn Central, supra].
In the former situation, the categorical taking, a reviewing court need not apply a case-specific analysis, and the owner should automatically recover for a taking of his property. A person may recover for this type of taking in the case of a physical invasion of his property by the government (not at issue in this case), or where a regulation forces an owner to “sacrifice all economically beneficial uses [of his land] in the name of the common good . ...” In the latter situation, the balancing test, a reviewing court must engage in an “ad hoc, factual inquir[y],” centering on three factors: (1) the character of the government’s action, (2) the economic effect of the regulation on the property, and (3) the extent by which the regulation has interfered with distinct investment-backed expectations.
The Court further explained:
While there is no set formula for determining when a taking has occurred under [the balancing] test, it is at least “clear that the question whether a regulation denies the owner economically viable use of his land requires at least a comparison of the value removed with the value that remains.” [Id. at 588 (citation omitted).]
With respect to Adams’ rooftop billboards, East Lansing’s claim that subsection 8.39(8) does not deny Adams all economically beneficial use of its property is dependent on East Lansing’s argument that the applicable “unit of property” is not each individual sign, but, rather, is Adams’ aggregate signs in either the “entire Lansing metro market” or the East Lansing area. East Lansing contends that application of subsection 8.39(8) to Adams’ rooftop billboards therefore does not constitute a taking because, even after the rooftop billboards are eliminated, Adams will still have signs in either the Lansing or East Lansing markets and thus Adams has not been denied all economically beneficial use of its property.
As explained in K&K, supra at 578-580 (citations omitted):
One of the fundamental principles of taking jurisprudence is the “nonsegmentation” principle. This principle holds that when evaluating the effect of a regulation on a parcel of property, the effect of the regulation must be viewed with respect to the parcel as a whole. Courts should not “divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated.” Rather, we must examine the effect of the regulation on the entire parcel, not just the affected portion of that parcel.
The denominator parcel is also not limited to each parcel of property. As explained by the United States Court of Appeals for the Federal Circuit in Tabb Lakes, Ltd v United States, 10 F3d 796, 802 (CA Fed, 1993):
“Clearly, the quantum of land to be considered is not each individual lot containing wetlands or even the combined area of wetlands. If that were true, the Corps’ protection of wetlands via a permit system would, ipso facto, constitute a taking in every case where it exercises its statutory authority.” [Citations omitted.]
This Court has previously found the nonsegmentation principle applicable to two adjoining parcels of property with unity of ownership. . . .
Determining the size of the denominator parcel is inherently a factual inquiry. As explained in Ciampitti v United States, 22 Ct Cl 310, 318-319 (1991):
“Factors such as the degree of contiguity, the dates of acquisition, the extent to which the parcel has been treated as a single unit, the extent to which the protected lands enhance the value of remaining lands, and no doubt many others would enter the calculus. The effect of a taking can obviously be disguised if the property at issue is too broadly defined. Conversely, a taking can appear to emerge if the property is viewed too narrowly. The effort should be to identify the parcel as realistically and fairly as possible, given the entire factual and regulatory environment.”
In this case, East Lansing raises the “denominator parcel” issue for the first time on appeal. Generally, issues not raised before the trial court are not preserved for appeal. Schellenberg v Rochester Lodge No 2225, 228 Mich App 20, 28; 577 NW2d 163 (1998). It is true that this Court may address constitutional questions not raised below where no question of fact exists and the interests of justice and judicial economy so dictate. Great Lakes Division of Nat’l Steel Corp v Ecorse, 227 Mich App 379, 426; 576 NW2d 667 (1998). However, determining the denominator parcel is a factual inquiry. K&K, supra at 580. Thus, we decline to consider this issue.
In any event, contrary to East Lansing’s argument on appeal, it is clear from the record that the denominator parcel used by the trial court was not Adams’ individual signs. Rather, the denominator parcel used by the trial court was Adams’ real property interests in the places where its signs are located, i.e., its fee simple interest at the Point and its separate leasehold interests at 111 North Harrison and 1108 East Grand River, with the income generated by the individual signs simply used to determine the value of these real property interests. Even if we were to consider the denominator parcel issue, we would find no error because, under the factors enunciated in K&K, it is realistic and fair to consider each of Adams’ real property interests separately for purposes of the taking analysis in this case. Id. at 580.
The trial court found that subsection 8.39(8), as applied to Adams’ rooftop leaseholds, constituted a categorical taking. Because the code requires that the rooftop billboards must be removed and no suggestion has been made that Adams might make some other economic or beneficial use of its rooftop leaseholds, we find no error in this regard. We further note that East Lansing raises no argument with respect to the method used to value the rooftop leaseholds. Therefore, we affirm the trial court’s final order with respect to Adams’ rooftop billboards.
Finally, East Lansing contends that even when the Point is considered the denominator parcel, enforcement of subsection 8.39(8) does not deny Adams all economically beneficial use of the Point because Adams will still be permitted to have four sign faces at this location under the code. East Lansing contends that the trial court thus erred in determining that subsection 8.39(8), as applied to the Point, constitutes a taking.
As indicated previously, Adams was primarily concerned at trial with establishing the amount of its loss at the Point. In determining this amount, the appraiser’s testimony assumed that Adams would be permitted to maintain four sign faces at the Point generating approximately $20,000 in gross income, thus indicating that subsection 8.39(8) does not deny Adams all economically beneficial or productive use of its fee simple at the Point. Therefore, for the purpose of determining whether enforcement of subsection 8.39(8) effected a taking at the Point, the trial court should have applied the ad hoc factual inquiry required by the three-part balancing test, including “ ‘a comparison of the value removed with the value that remains.’ ” K&K, supra at 588 (citation omitted).
However, with respect to the Point, the trial court considered only the second factor (the economic effect of the regulation on the claimant) of the three-part balancing test. Moreover, the court considered this factor only in a limited manner. Specifically, as did Adams, the court focused only on the value of the loss sustained by Adams at the Point. Thus, while the court made a specific finding with respect to the value removed at the Point, the court made no specific finding with respect to the value remaining at the Point. We note that such a value might be calculated on the present record where it was assumed that Adams would be permitted to maintain four sign faces generating a gross income of $20,000. However, Adams disputed this assumption below, arguing that even assuming four sign faces were theoretically or mathematically possible at the Point, there was no showing that the signs would be “usable.”
Therefore, as in K&K, supra at 588, we believe it would be “imprudent to decide whether there was a taking of [Adams’] property [at the Point] on the basis of an inadequate record.” Therefore, we reverse the trial court’s final order with respect to the Point and remand to the trial court for further consideration. The court must calculate the value remaining at the Point and then reevaluate Adams’ claim of a taking at the Point under the three-part balancing test. The trial court may, but need not, take additional proofs to supplement the existing record as it, in its learned discretion, deems necessary to properly consider the three-part balancing test.
In summary, we affirm the trial court’s final order with respect to Adams’ rooftop billboards. We reverse the trial court’s final order with respect to Adams’ freestanding billboards at the Point and remand for further proceedings in accordance with this opinion.
Affirmed in part, reversed in part, and remanded. We do not retain jurisdiction. No taxable costs pursuant to MCR 7.219, neither party having prevailed in fidl.
Off-premises billboards direct attention to a use, business, commodity, service, or activity not conducted, sold, or offered upon the premises where the signs are located. See Adams Outdoor Advertising v East Lansing, 439 Mich 209, 213-214; 483 NW2d 38 (1992) (Adams I).
The “elimination of nonconforming uses and structures over a specified period of time is commonly referred to as ‘amortization.’ ” Adams I, n 1, supra at 216, n 12. One court observed as follows with respect to the use of the term “amortization” to describe such an ordinance:
The ordinance here requires that nonconforming signs must be removed or brought into conformance within a specified period of time after they become nonconforming. This is referred to as “amortization,’’ but in reality it is no more than notice to the owner and user of the sign that they have a period of time to make whatever adjustments or other arrangements they can. This is probably not a proper use of the word “amortization,” and so used it contains no connotation of compensation or a requirement therefor. [Art Neon Co v City & Co of Denver, 488 F2d 118, 121 (CA 10, 1973).]
Redesignated as MCL 117.41(f); MSA 5.2082(f) by 1991 PA 175.
The court explained that Adams’ expert had indicated that the ten percent rate was comprised of seven percent for income stream and three percent for risk factors. In reducing the capitalization rate from ten percent to seven percent, the court stated that no risk existed in this case.
Amortization is a term commonly applied to ordinances that eliminate nonconforming signs over time. See n 2, supra.
For an example of such a case, see East Lansing’s cited case of Art Neon, supra at 121-122.
For an example of such a case, see East Lansing’s cited case of Art Neon, supra.
For an example of such a case, see East Lansing’s cited case of Art Neon, supra at 122.
Specifically, the majority opinion, noting that the trial court had not addressed the taking issue, stated that Justice Levin’s analysis of the taking issue was “dicta, interesting dicta, but irrelevant to the outcome of this case.” Id. at 219, n 15.
To be fair, although the taking cases relied on by our Supreme Court in K&K were decided before the trial in this case, K&K itself, with its excellent summary of the law in this area, was not decided until after the trial in this case. | [
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Young, Jr., J.
Plaintiffs appeal as of right an order denying their request for a permanent injunction that would prohibit defendant from discharging treated wastewater into a wetland on its property, which wastewater would then flow south into a wetland located on plaintiffs’ property. Plaintiffs also appeal the trial court’s decision to apportion costs. Defendant cross appeals the trial court’s grant of summary disposition to plaintiffs with regard to their claim that the proposed discharge would constitute a trespass. We affirm in part and reverse in part.
I. FACTUAL and procedural background
A. INTRODUCTION
Plaintiffs and defendant own adjoining parcels of land in Holly Township that are divided by East Holly Road. Plaintiffs’ parcel, located south of the road, consists of fifty-four acres, twenty-five of which are covered by a wetland (the “Lacey Lake north wetland”). Defendant’s property is situated north of East Holly Road. Defendant’s property also contains a wetland (the “Miner wetland”) that is connected to plaintiffs’ wetland to the south via a culvert that passes under East Holly Road. Natural accumulations of water (characterized by plaintiffs as “sheet flow”) drain from defendant’s property to plaintiffs’ property to the adjacent Lacey Lake, which is part of the Shiawassee River. The Shiawassee River, in turn, eventually flows into Lake Huron. Plaintiffs do not own all of the Lacey Lake north wetland; the wetland extends further south past their property to Lacey Lake itself.
B. DEFENDANT’S SEWAGE TREATMENT PLAN
Defendant planned to develop its property into a manufactured-home community and sought permission to connect its proposed development to the Village of Holly’s municipal wastewater treatment system. After that request was denied, defendant successfully obtained a permit from the Michigan Department of Natural Resources (dnr) allowing defendant to discharge treated sewage into its Miner wetland. As a consequence, such discharged treated sewage would flow south through the Miner wetland to the culvert under East Holly Road into plaintiff’s Lacey Lake north wetland, and from there into adjacent Lacey Lake.
Defendant’s permit was issued pursuant to the National Pollution Discharge Elimination System (npdes), established under 33 USC 1342. The npdes is part of the Federal Water Pollution Control Act, commonly referred to as the Clean Water Act, 33 USC 1251 et seq. Under the water resources protection provisions of Michigan’s Natural Resources and Environmental Protection Act (nrepa), MCL 324.3101 et seq.; MSA 13A.3101 et seq., the dnr (now the Depart ment of Environmental Quality [deq]) is responsible for issuing npdes permits in Michigan and ensuring that those permits comply with applicable federal law and regulations. See Michigan Environmental Law Deskbook, vol 1, § 4.3, p 4-4. Indeed, permits issued by the dnr are subject to review by the federal Environmental Protection Agency. See 33 USC 1342(b).
C. PROCEEDINGS below
Plaintiffs initially challenged defendant’s permit in administrative proceedings before the dnr. In addition to challenging the permit on the ground that it failed to comply with the requirements of the various water pollution statutes, plaintiffs also challenged the permit on the ground that it authorized an illegal trespass over plaintiffs’ property. Plaintiffs’ administrative challenges were dismissed, and the issuance of the permit was upheld. Significantly, the dnr held that the trespass claim fell outside its jurisdiction and constituted a private matter between the parties.
Before development could begin, plaintiffs filed suit against defendant in the Oakland Circuit Court, alleging that the planned discharge of treated sewage would constitute a trespass, a nuisance, and a violation of the Michigan Environmental Protection Act (MEPA), MCL 691.1201 et seq.; MSA 14.528(201) et seq. (the provisions of which are now contained in Article I, Part 17 of the NREPA, MCL 324.1701 et seq.; MSA 13A.1701 et seq.) Plaintiffs sought both injunctive relief and future damages. Plaintiffs also asked the trial court to reverse the dnr’s decision granting the npdes permit to defendant.
Following cross-motions for summary disposition, the trial court granted partial summary disposition to plaintiffs on their trespass claim, but granted summary disposition with regard to defendant on plaintiffs’ nuisance and MEPA claims. The trial court also affirmed the dnr’s decision to issue the npdes permit. The court subsequently denied defendant’s motions for reconsideration and relief from judgment. Following a hearing, the trial court denied plaintiffs’ request for injunctive relief and awarded nominal damages of $1 on plaintiffs’ trespass claim. In so doing, the court balanced the equities involved and determined that plaintiffs failed to show harm sufficient to warrant an injunction. Finally, the court apportioned costs among the parties to reflect the fact that plaintiffs prevailed on their trespass claim, while defendant prevailed on the nuisance and mepa claims, as well as on plaintiffs’ request for injunctive relief. See MCR 2.625(B).
H. ANALYSIS
A. DEFENDANT’S CROSS APPEAL
We first address defendant’s cross appeal, in which it is contended that the trial court erred in granting summary disposition to plaintiffs with regard to their anticipatory trespass claim. We agree, but for entirely different reasons than those advanced by defendant.
Because the trespass alleged by plaintiffs was merely anticipatory, plaintiffs had no cause of action for trespass for which summary disposition could have been granted. While an injunction may lie when a tort is merely threatened, see Adkins v Thomas Solvent Co, 440 Mich 293, 315; 487 NW2d 715 (1992), a cause of action for damages will not. See Davidson v Bugbee, 227 Mich App 264, 269; 575 NW2d 574 (1997) (“A cause of action accrues when all the elements of the claim have occurred and can be alleged in a proper complaint”). Thus, the trial court should have considered plaintiffs’ anticipatory trespass claim only in the context of their request for injunctive relief. Any claim for actual trespass was premature. Therefore, the trial court’s order granting partial summary disposition to plaintiffs was erroneous and must be reversed.
B. PLAINTIFFS’ REQUEST FOR INJUNCTIVE RELIEF
Plaintiffs essentially maintain that the trial court erred in balancing the relative equities between the parties and in failing to enjoin the proposed discharge. We find no error.
“Injunctive relief is an extraordinary remedy that issues only when justice requires, there is no adequate remedy at law, and there exists a real and imminent danger of irreparable injury.” Jeffrey v Clinton Twp, 195 Mich App 260, 263-264; 489 NW2d 211 (1992). Granting injunctive relief is within the sound discretion of the trial court. Holland v Miller, 325 Mich 604, 611; 39 NW2d 87 (1949); Jeffrey, supra at 263. We review the trial court’s decision for an abuse of discretion. Holly Twp v Holly Disposal, Inc, 440 Mich 891 (1992); Seifert v Buhl Optical Co, 276 Mich 692, 699; 268 NW 784 (1936).
At the outset, we note that both parties make various arguments regarding the legal right, if any, of defendant to make the proposed discharge. Plaintiffs’ position essentially is that any increase in the flow of surface water onto their property, regardless of its cleanliness, will constitute an invasion of their private property rights warranting an injunction. Defendant, on the other hand, maintains that, because the discharge is authorized by the dnr and the Lacey Lake north wetland is subject to regulation under the applicable clean water acts, plaintiffs have no right to object. Defendant also argues that the Lacey Lake north wetland is part of a natural watercourse and that defendant has the right as a riparian owner to increase the flow of water between the properties even if it is to plaintiffs’ detriment. Finally, defendant argues that, even if the discharge constitutes a technical trespass, plaintiffs are not entitled to an injunction because the equities favor defendant.
We reject as unfounded defendant’s claim that there can be no trespass because the Lacey Lake north wetland is subject to regulation by the dnr under the Clean Water Act and the water resources protection provisions of the nrepa, MCL 324.3101 et seq.-, MSA 13A.3101 et seq., and that defendant is “authorized” by the npdes permit to discharge treated sewage into it. Defendant fails to cite any particular provision of the relevant statutes or any other authority for its apparent belief that these statutes somehow preempt the common-law rights of the owner of a lower estate. Nor are we persuaded by defendant’s argument that plaintiffs cannot object to the discharge because they do not “own” the water flowing through the wetland. For the reasons stated below, we also reject plaintiffs’ argument that, because the part of the Lacey Lake north wetland located on their property is “private property,” is not “navigable,” and has not been “impressed with the public trust,” defendant has no right to “enter” it by way of the proposed discharge.
Defendant’s right, if any, to discharge treated wastewater into the Lacey Lake north wetland depends on the answer to the following question: Is the Lacey Lake north wetland part of a natural “watercourse,” such that the rules regarding the rights of riparian owners apply, or is this case governed by the rules relating to the flow of “surface water” between adjoining properties? If the water flow can be charac terized as a natural watercourse to which defendant has riparian rights, then defendant may make “reasonable use” of it. People v Hulbert, 131 Mich 156; 91 NW 211 (1902); Thies v Howland, 424 Mich 282, 288, n 3; 380 NW2d 463 (1985); White Lake Improvement Ass’n v Whitehall, 22 Mich App 262, 272, n 11; 177 NW2d 473 (1970). However, even if riparian rules apply, defendant cannot pollute the water, see Dohany v Birmingham, 301 Mich 30; 2 NW2d 907 (1942); Attorney General ex rel Wyoming Twp v Grand Rapids, 175 Mich 503; 141 NW 890 (1913), or unreasonably increase the flow to the extent that it floods plaintiffs’ property. Cf. Richards v Ann Arbor, 152 Mich 15; 115 NW 1047 (1908); see also generally anno: Right to drain surface water into natural watercourse, 28 ALR 1262; 78 Am Jur 2d, Waters, § 13, pp 458-459, §§ 132-133, pp 580- 582.
On the other hand, if the law relating to the flow and disposition of surface waters applies, then the proposed discharge would arguably constitute at least a technical trespass. Under Michigan law, the owner of a lower or servient estate “must receive the surface water from the upper or dominant estate in its natural flow.” Bennett v Eaton Co, 340 Mich 330, 335-336; 65 NW2d 794 (1954). However, it is equally clear that the owner of the upper estate has no right to increase the amount of water that would otherwise naturally flow onto the lower estate. Id. at 336-337; see also Allen v Morris Bldg Co, 360 Mich 214, 217; 103 NW2d 491 (1960); Schmidt v Eger, 94 Mich App 728, 738; 289 NW2d 851 (1980); Lewallen v City of Niles, 86 Mich App 332, 334; 272 NW2d 350 (1978).
The problem in this case is that the precise character of the water flow between plaintiffs’ and defendant’s properties was never really litigated below. Indeed, defendant did not raise this issue until its motion for reconsideration of the trial court’s grant of partial summary disposition to plaintiffs. Certainly, the trial court never ruled on the issue. However, the resolution of this issue is not necessary for purposes of deciding whether the trial court correctly declined to issue an injunction. Even assuming that the Lacey Lake north wetland is not part of a natural watercourse, that it merely serves as an outlet for the periodic draining of natural surface waters accumulating on defendant’s property, and that defendant therefore has no right to increase the flow of such water onto plaintiffs’ property, it is clear that plaintiffs failed to establish a right to injunctive relief at this time.
Citing Kratze v Independent Order of Oddfellows, 442 Mich 136, 145; 500 NW2d 115 (1993), plaintiffs argue that the trial court erred in applying a balancing test. However, even were we to assume that the proposed discharge would constitute a technical trespass, as the trial court noted, the Kratze Court held only that a court “is not bound to engage in a balancing of the relative hardships and equities if the encroachment resulted from an intentional or willful act.” Id. (emphasis added). We are not persuaded that the trial court erred in balancing the equities in this case. The general rule, as stated in Kratze, is that “ ‘the court will balance the benefit of an injunction to plaintiff against the inconvenience and damage to defendant, and grant an injunction or award damages as seems most consistent with justice and equity under all the circumstances of the case.’ ” Id. at 143, n 7, citing Hasselbring v Koepke, 263 Mich 466, 480; 248 NW 869 (1933); see also Monroe Carp Pond Co v River Raisin Paper Co, 240 Mich 279; 215 NW 325 (1927) (upholding denial of an injunction even though the plaintiff, a lower riparian owner, suffered compensable damages as a result of the defendant’s pollution of a stream). Moreover, 4 Restatement Torts, 2d, §936, pp 565-566, cited with approval in Kratze, supra at 142, n 6, provides that the following factors be taken into account in determining the propriety of issuing an injunction:
(a) the nature of the interest to be protected,
(b) the relative adequacy to the plaintiff of injunction and of other remedies,
(c) any unreasonable delay by the plaintiff in bringing suit,
(d) any related misconduct on the part of the plaintiff,
(e) the relative hardship likely to result to defendant if an injunction is granted and to plaintiff if it is denied,
(f) the interests of third persons and of the public, and
(g) the practicability of framing and enforcing the order or judgment.
As the trial court noted in its written opinion, the water cases that plaintiffs cite in support of their request for an injunction all involve a showing of harm. See, e.g., Ruehs v Schantz, 309 Mich 245; 15 NW2d 148 (1944); Peacock v Stinchcomb, 189 Mich 301; 155 NW 349 (1915); Bruggink v Thomas, 125 Mich 9; 83 NW 1019 (1900); A P Cook Co v Beard, 108 Mich 17; 65 NW 518 (1895). Here, other than general claims that the value of their property will be lowered in the eyes of prospective purchasers and that plaintiffs have a basic right to its exclusive use and possession, plaintiffs presented no evidence that they will suffer any specific, let alone irreparable, harm to their property. Moreover, plaintiffs do not dispute the trial court’s finding that the harm to defendant in granting the injunction would be considerable.
Finally, on its face, the statutory provision, MCL 600.2919; MSA 27A.2919, that plaintiffs cite in support of their argument that injunctive relief for continuing trespasses has been codified, applies only to specific types of damage to land not at issue. In sum, we cannot say that the trial court abused its discretion in denying plaintiffs’ request for an injunction. Accordingly, we affirm the trial court’s decision in that regard.
C. DAMAGES
On the basis of its determination that plaintiffs’ failed to show that any material harm would result from the proposed discharge, the trial court awarded nominal damages. However, as stated, any claim for damages is premature because defendant has not yet begun operating its proposed waste treatment facility. Therefore, the trial court erred in awarding even nominal damages to plaintiffs.
D. COSTS
Finally, plaintiffs argue that the trial court erred in apportioning costs. However, because we reverse the trial court’s grant of partial summary disposition to plaintiffs, this issue is moot. See Michigan Nat’l Bank v St Paul Fire & Marine Ins Co, 223 Mich App 19, 21; 566 NW2d 7 (1997).
Affirmed in part and reversed in part.
Plaintiffs also own a second parcel that is not at issue here.
It is undisputed that, under the permit the dnr issued, defendant would be allowed to discharge up to 166,000 gallons of effluent a day.
Plaintiffs do not appeal the dismissal of their nuisance and mepa claims.
Plaintiffs have not appealed the trial court’s decision affirming the dnr’s issuance of the npdes permit. The clean water regulations at issue here apparently are sufficiently stringent that the treated discharge permitted is subject to the “near drinking water standard” and thus should not be harmful if consumed. Consequently, on appeal, plaintiffs focus not on the fact that the anticipated treated sewage will be actually harmful in an environmental sense, but on the perceived harm that disclosure of the fact that treated sewage flows through their property will have on the value of their property.
Our Supreme Court has defined a “watercourse” as '“[a] natural stream of water fed from permanent or periodical natural sources and usually flowing in a particular direction in a defined channel, having a bed and banks or sides, and usually discharging itself into some other stream or body of water.’" Grand Rapids & I R Co v Round, 220 Mich 475, 478; 190 NW 248 (1922), quoting Black’s Law Dictionary (2d ed).
“Land which includes or is bounded by a natural watercourse is defined as riparian.” Thies v Howland, 424 Mich 282, 287-288; 380 NW2d 463 (1985).
“Surface waters” are defined as “waters on the surface of the ground, usually created by rain or snow, which are of a casual or vagrant character, following no definite course and having no substantial or permanent existence.” Fenmode, Inc v Aetna Casualty & Surety Co, 303 Mich 188, 192; 6 NW2d 479 (1942). Such waters are lost by percolation, evaporation, or by reaching some definite watercourse or substantial body of water into which they flow. Id.
The distinction between natural watercourses and outlets for the flow of surface waters was alluded to in Gregory v Bush, 64 Mich 37; 31 NW 90 (1887), where the Court stated:
We do not think this ravine can be termed a natural watercourse. It is simply an outlet for surface water at certain seasons of the year. It has no defined bed or channel, with banks and sides. ... It is therefore not governed by the well-settled rules applying to natural streams. No right can be claimed by defendant to run this water upon the land of complainant. . . because it is a water-course. He must therefore be governed by the law relating to the flow and disposition of surface water .... [Id. at 41.]
We further note that, while the legal rules for determining what constitutes a “watercourse” as opposed to the natural flow of “surface waters” are well-defined, this is a determination that depends heavily on the facts of a given case. Compare Hilliker v Coleman, 73 Mich 170; 41 NW 219 (1889), and Rummell v Lamb, 100 Mich 424; 59 NW 167 (1894), with Gregory v Bush, 64 Mich 37; 31 NW 90 (1887).
Plaintiffs’ expert never attempted to quantify the harm that plaintiffs perceived would flow from the fact that treated and presumably environmentally harmless sewage would be discharged onto their property.
We do note that, in the event that the discharge of treated waste-water does commence and plaintiffs can show that they suffered harm as a result, nothing in this opinion should be construed as preventing plaintiffs from seeking another injunction or bringing a cause of action for damages. | [
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Mackenzie, P.J.
This case involves a dispute between two insurance companies over a subrogation claim for property damage to a home owned by plaintiff’s insureds. Plaintiff alleged that the home sustained fire damage as a result of a power surge caused by electric lines that fell on the home’s service line when a motorist insured by defendant struck a utility pole. Plaintiff appeals as of right from an order granting summary disposition in favor of defendant on the ground that the claim was barred by the one-year statute of limitations under the no-fault property damage statute, MCL 500.3145(2); MSA 24.13145(2). We affirm.
The automobile accident and fire occurred on March 2, 1996. Plaintiff’s general adjuster sent a notice of claim on May 3, 1996. Defendant acknowledged the notice, but in a letter dated June 4, noted that “the police accident report makes no mention of the fire which you are alleging our insureds started,” and requested further information regarding the cause of the fire. In a July 26, 1996, letter, defendant requested an estimated total claim. Plaintiff then forwarded an August 28, 1996, “cause and origin” report from an electrician and, in late January 1997, notified defendant of the total amount of the property damage. In a February 3, 1997, telephone conversation, defendant’s adjuster told plaintiff’s adjuster that plaintiff should file a lawsuit for the claim.
Plaintiff filed its complaint for damages on April 1, 1997, thirteen months after the accident and fire. Defendant moved for summary disposition based on subsection 3145(2) of the no-fault act, MCL 500.3145(2); MSA 24.13145(2), which provides that “[a]n action for recovery of property protection insurance benefits shall not be commenced later than 1 year after the accident.” Plaintiff maintained that the statute was tolled by plaintiff’s notice of claim and the parties’ negotiations. The trial court rejected plaintiffs position, citing United States Fidelity & Guaranty Co v Amerisure Ins Co, 195 Mich App 1; 489 NW2d 115 (1992), and dismissed the case with prejudice.
In USF&G, p 6, this Court concluded that notice to a no-fault insurer of a claim for property protection benefits does not toll the one-year period of limitation set forth at MCL 500.3145(2); MSA 24.13145(2) during the parties’ settlement negotiations. As recognized by the trial court, USF&G is binding precedent under Administrative Order No. 1994-4, 445 Mich xci [now MCR 7.215(H)], and compels the conclusion that plaintiff’s complaint in this case was time-barred. Plaintiff seeks to avoid that result by arguing that the USF&G panel’s decision was mere dicta, not subject to the administrative order or court rule, and that a pre-Administrative Order case, Preferred Risk Mut Ins Co v State Farm Mut Automobile Ins Co, 123 Mich App 416; 333 NW2d 303 (1983), governs this case. We disagree. The controlling issue in both USF&G and Preferred Risk was whether the one-year statute of limitations contained in MCL 500.3145(2); MSA 24.13145(2) could be tolled by notice letters sent to a no-fault insurer. USF&G held that it could not, contrary to the decision of the Preferred Risk panel. The USF&G holding was no more “dicta” than was the Preferred Risk holding plaintiff seeks to have applied. The trial court properly concluded that USF&G is binding and that under that case plaintiff’s complaint was time-barred. Furthermore, we are not persuaded that USF&G was wrongly decided or that we should adopt the conflicting holding of Preferred Risk under the procedure of MCR 7.215(H).
Relying on Cincinnati Ins Co v Citizens Ins Co, 454 Mich 263; 562 NW2d 648 (1997), plaintiff contends that defendant should be equitably estopped from asserting the statute of limitations as a bar to plaintiff’s action. As did the trial court, we conclude that Cincinnati is clearly distinguishable from this case.
In Cincinnati, a motorist insured by Citizens Insurance Company struck a medical building occupied by Cincinnati’s insured in February 1992. Cincinnati notified Citizens of its subrogation claim the following month. Cincinnati apparently understood that the claim would be paid upon receipt of acceptable docu mentation of the loss. In January 1993, Cincinnati submitted documentation of property and contents losses to Citizens and requested payment. Cincinnati also advised Citizens that it was still in the process of adjusting its insured’s business interruption claim and would forward documentation and request for payment upon documenting that claim. Approximately two weeks later, Citizens informed Cincinnati that it did not want to process the property damage part of the claim separately from the business loss claim. Cincinnati agreed to a deferred payment, and in May and June 1993, after the business loss claim was settled, it requested a check for the entire claim. In August 1993, Citizens refused to pay on the subrogation claim because Cincinnati had allowed the one-year statute of limitations, MCL 500.3145(2); MSA 24.13145(2), to expire. See Cincinnati, supra, pp 264-267.
On these facts, the Supreme Court concluded that it “would be unjust to allow Citizens to assert the statute of limitations where Cincinnati . . . acted in apparent good faith and for the convenience of Citizens to defer [its] demand for payment” until its insured’s entire loss had been documented. Id., p 271 (emphasis in the original). The Court further noted that the “record indicates that Cincinnati proceeded as it did at the request of Citizens.” Id., pp 271-272 (emphasis in the original). Finding “ample evidence that Cincinnati . . . was justified in relying, and did rely, on the representations of Citizens . . . that the subrogation claim would be processed without difficulty, once all the documentation was complete,” id., p 272, the Court concluded that Citizens was estopped from asserting the statute of limitations as a bar to Cincinnati’s action. Id., pp 272-273.
Unlike the situation in Cincinnati, in this case there is no evidence that defendant made assurances that payment would be made upon proper documentation, that the parties agreed to cooperate in the processing of the claim, or that defendant induced plaintiff to defer its request for payment beyond one year after the accident and fire. Instead, defendant informed plaintiff that it had questions concerning the cause of the fire, and, approximately one month before the expiration of the one-year period, informed plaintiff that it would not settle the case. Defendant’s conduct could not have lulled plaintiff into believing that its claim would be honored after the statutory period as in Cincinnati, nor could it have left plaintiff with no alternative but to file its action after the statutory period.
To prevail on its estoppel theory, plaintiff had to establish that defendant induced it to refrain from bringing an action within the period fixed by statute. Bohlinger v DAIIE, 120 Mich App 269, 274-275; 327 NW2d 466 (1982). There is no indication that defendant’s conduct influenced plaintiff’s failure to bring its action before the expiration of the statutory period. Having given plaintiff a month in which to timely file suit, defendant was not estopped from raising the statute of limitations as a bar to plaintiff’s cause of action.
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Cavanagh, J.
Plaintiff Shannon Depyper appeals as of right from the jury verdict in favor of defendant Safeco Insurance Company of America in this action for recovery of no-fault benefits. We reverse and remand for entry of judgment in favor of plaintiff.
The facts of this case are essentially undisputed. Plaintiff and her husband were insured under a no-fault automobile insurance policy issued by defendant. Plaintiff and her husband failed to pay a premium that was due on September 22, 1992. Plaintiff was injured in an automobile accident on October 27, 1992. Defendant refused to pay the claim, asserting that the insurance policy had been canceled effective October 20, 1992, because the premium had not been paid.
Defendant produced a copy of a letter dated October 6, 1992, to support its contention that plaintiff had been given notice of the impending cancellation of the policy. However, although defendant’s policy contains a provision stating that defendant will comply with state-law notice requirements for terminating an insurance policy, the cancellation letter did not comply with the requirement in MCL 500.3020(5); MSA 24.13020(5) that a notice of cancellation contain a statement that the insured should not operate an uninsured vehicle.
On October 8, 1993, plaintiff filed the instant action, asserting that defendant had wrongfully denied her claim. On May 3, 1995, plaintiff filed a motion for summary disposition pursuant to MCR 2.116(C)(9) and (10). Plaintiff contended that she never received a cancellation notice from defendant. Plaintiff further argued that the cancellation notice produced by defendant was ineffective because it did not comply with MCL 500.3020(5); MSA 24.13020(5).
The trial court denied plaintiff’s motion on September 13, 1995. The trial court found that defendant’s noncompliance with MCL 500.3020(5); MSA 24.13020(5) did not invalidate the cancellation notice because “strict compliance with the warning requirement would not protect against cancellation and preserve the contract of insurance.” The case proceeded to trial on the question whether plaintiff had received the notice that her insurance was canceled, and a jury found in favor of defendant. The order incorporating this verdict was entered on October 22, 1996.
In her sole issue on appeal, plaintiff contends that the trial court erred in denying her motion for summary disposition. On appeal, an order granting or denying summary disposition is reviewed de novo. A motion for summary disposition may be granted pursuant to MCR 2.116(C)(10) when, except with regard to the amount of damages, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Giving the benefit of reasonable doubt to the nonmovant, the trial court must determine whether a record might be developed that would leave open an issue upon which reasonable minds might differ. Moore v First Security Casualty Co, 224 Mich App 370, 375; 568 NW2d 841 (1997).
Because the parties’ dispute concerns a statutory requirement, rather than an interpretation of the language of the insurance policy itself, we conclude that the trial court’s reliance on contract principles alone was misplaced. As the Supreme Court has stated:
The policy and the statutes related thereto must be read and construed together as though the statutes were a part of the contract, for it is to be presumed that the parties contracted with the intention of executing a policy satisfying the statutory requirements, and intended to make the contract to carry out its purpose.
A policy of insurance must be construed to satisfy the provisions of the law by which it was required, particularly when the policy specifies that it was issued to conform to the statutory requirement; and where an insurance policy has been issued in pursuance of the requirement of a statute which forbids the operation of a motor vehicle until good and sufficient security has been given, the court should construe this statute and the policy together in light of the legislative purpose. [Rohlman v Hawkeye-Secumty Ins Co, 442 Mich 520, 525, n 3; 502 NW2d 310 (1993), quoting 12A Couch, Insurance, 2d (rev ed), § 45:694, p 331-332.]
Defendant’s policy states it will comply with state-law notice requirements for terminating an insurance policy. Michigan law provides:
A notice of cancellation, including a cancellation notice under section 3224, shall be accompanied by a statement that the insured shall not operate or permit the operation of the vehicle to which notice of cancellation is applicable, or operate any other vehicle, unless the vehicle is insured as required by law. [MCL 500.3020(5); MSA 24.13020(5).]
The cardinal rule of statutory construction is to give effect to the Legislature’s intent. When statutory language is clear and unambiguous, courts must apply it as written. The statutory language is given its ordinary and generally accepted meaning. Putkamer v Transamerica Ins Corp of America, 454 Mich 626, 631; 563 NW2d 683 (1997). However, if reasonable minds may differ on the meaning of a statute, judicial construction may be appropriate. USAA Ins Co v Houston General Ins Co, 220 Mich App 386, 389-390; 559 NW2d 98 (1996).
The general rule is that an effective cancellation of an insurance policy requires strict compliance with the cancellation clause. Blekkenk v Allstate Ins Co, 152 Mich App 65, 74; 393 NW2d 883 (1986). Insurance contracts should be construed in light of statutory requirements, and mandatory statutory provisions should be read into insurance contracts. Id. at 78. The use of the word “shall” in a statute connotes a mandatory duty or requirement. Scarsella v Pollak, 232 Mich App 61, 63-64; _ NW2d _ (1998); Hadfield v Oakland Co Drain Comm’r, 218 Mich App 351, 357; 554 NW2d 43 (1996). Thus, pursuant to MCL 500.3020(5); MSA 24.13020(5), defendant was required to include the warning about not operating an uninsured vehicle in its notice of cancellation. It is undisputed that the notice of cancellation that defendant sent to plaintiff did not contain the statutorily required warning.* However, the statute is silent with regard to the consequences when a cancellation notice does not include the mandatory warning.
There appears to be no case law in Michigan directly on point regarding whether a timely notice of cancellation that omits the warning against driving an uninsured vehicle invalidates the entire cancellation notice. This Court did, however, touch on this issue when construing MCL 500.3020(1); MSA 24.13020(1) in Blekkenk, supra. In Blekkenk, the insured orally requested that his insurance agent cancel his insurance policy, but was thereafter injured in an automobile accident. Id. at 69. This Court held that the warning statement was not required where the insured, rather than the insurer, cancels the policy. Id. at 71. However, it is clear from its discussion of the issue that the Blekkenk panel recognized the mandatory nature of the requirement when the insurer cancels a policy.
Other jurisdictions have generally held that strict compliance by an insurer with a statute governing cancellation notices is essential to effect cancellation by such notices. See Pearson v Nationwide Mut Ins Co, 325 NC 246, 256; 382 SE2d 745 (1989). The statutory warning at issue in this case is intended to accompany the necessary ten-day notice of cancellation required by MCL 500.3020(l)(b); MSA 24.13020(l)(b), which is applicable when an insurer cancels the policy. Blekkenk, supra. The required warning that the insured should not operate an uninsured vehicle encourages her to obtain replacement insurance within the ten-day period. The warning also serves a deterrent purpose by reminding the insured that she cannot drive without insurance. Cf. Mong v Allstate Ins Co, 15 AD2d 257; 223 NYS2d 218 (1962); Crisp v State Farm Mut Ins Co, 256 NC 408; 124 SE2d 149 (1962).
Defendant contends that the warning is intended solely to protect third parties, namely, members of the public who may be injured in accidents involving uninsured motorists. We disagree. While the public undoubtedly benefits from a warning that deters unin sured individuals from driving, the clear language of the statute provides that the warning is to be given to the insured. Cf. Allstate Ins Co v DAIIE, 73 Mich App 112, 115-116; 251 NW2d 266 (1976). The logical conclusion, therefore, is that the Legislature intended the warning to benefit the recipients by reminding them that they should not operate uninsured vehicles.
Defendant also points out that plaintiff has admitted that she knew that it is illegal to drive a car that is uninsured. Defendant argues that requiring strict compliance with the warning requirement would lead to an absurdity because plaintiff was already aware of the information that the warning would have conveyed. However, nothing in MCL 500.3020(5); MSA 24.13020(5) relieves an insurer from its obligation to include the warning against driving an uninsured vehicle when its insured knows of the obligation to maintain insurance. Moreover, the fact of actual knowledge does not render the lack of notice harmless because one purpose of notice is to deter the operation of the automobile after the effective date of cancellation of insurance.
Insurance laws and policies are to be liberally construed in favor of policyholders, creditors, and the public. Blekkenk, supra at 77; Murphy v Seed-Roberts Agency, Inc, 79 Mich App 1, 11; 261 NW2d 198 (1977). Construing MCL 500.3020(5); MSA 24.13020(5) liberally, in favor of policyholders, and giving due regard to the deterrent purpose of the warning, we hold, as a matter of law, that defendant’s failure to give the warning mandated by MCL 500.3020(5); MSA 24.13020 (5) renders its cancellation notice ineffective. Hence, we reverse the trial court’s denial of summary disposition and remand for entry of judgment in favor of plaintiff.
Reversed and remanded for entry of judgment in favor of plaintiff. We do not retain jurisdiction.
Hoekstra, P.J., concurred.
Plaintiff and her husband are now divorced.
The statute was amended by 1995 PA 288 to redesignate this provision as MCL 500.3020(6); MSA 24.13020(6). The prior version is considered here because rights and obligations under an insurance policy vest at the time of the accident, Clevenger v Allstate Ins Co, 443 Mich 646, 656; 505 NW2d 553 (1993), and plaintiff’s accident occurred in 1992.
Two additional parties took part in the trial court proceedings, although they are not involved in this appeal. The trial court permitted the Department of Social Services to intervene on the basis that it would be subrogated to plaintiff’s right to collect for her medical expenses because it had made medical payments for her under a Medicaid program. In addition, plaintiff filed an amended complaint on October 18, 1994, in which she sought to bar the Michigan Conference of Teamsters Health and Welfare Fund from obtaining reimbursements for payments for medical expenses that it had made on her behalf, which it claimed had been done erroneously.
The policy states:
If the law in effect in your state requires any longer notice or any special form of or procedure for giving notice, or modifies any of the stated termination reasons, we will comply with those requirements.
Defendant has provided no explanation for its failure to include the warning in the notice of cancellation.
In contrast, the Legislature has specified that
no cancellation shall be effective unless a written notice of cancellation is mailed by certified mail, return receipt requested, to the insured at the last address known to the insurer either through its records, the personal records of the agent who wrote the policy, or as supplied by the insured. [MCL 500.3224(2); MSA 24.13224(2).]
The requirement of a ten-day notice of cancellation serves the purpose of giving the insured time to obtain other insurance or, alternatively, “simply to order their affairs so that the risks of operating without insurance will not have to run.” Lease Car of America, Inc v Rahn, 419 Mich 48, 54; 347 NW2d 444 (1984); State Automobile Mut Ins Co v Babcock, 54 Mich App 194; 220 NW2d 717 (1974).
Michigan’s warning provision is distinguishable from New York’s and North Carolina’s respective provisions because it does not require that the insured be notified of any criminal penalties, although it is noteworthy that the no-fault act provides for misdemeanor penalties for noncompliance in MCL 500.3102(2); MSA 24.13102(2).
Furthermore, if we accepted defendant’s argument, cases such as this will turn on what the insured actually knew, which often cannot be established through external evidence. In at least some instances, insureds would be faced with the difficult choice of lying about what they knew or losing their no-fault coverage. A more straightforward result is obtained simply by requiring insurers to comply with MCL 500.3020(5); MSA 24.13020(5). | [
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Sharpe, J.
Plaintiffs bring ejectment to recover the possession of a strip of land lying along Lake Michigan, being the south 80 rods of lot 3 in section 27 in township 12 north, range 18 west, of which they have the record title. The defendant claims by adverse possession. The court, on trial without a jury, made findings supporting plaintiffs’ claim and entered a judgment in their favor. Defendant seeks review by writ of error.
Among the findings of fact is the following:
“The court is of the opinion and further finds that the defendant has not established ownership in this property by adverse possession for the length of time required by law.”
This finding must be treated by us as would a special verdict of a jury, and, if there be evidence to support it, the judgment founded thereon will not be reversed unless such finding be against the clear weight of the evidence. 3 Comp. Laws 1915, § 12587; Dows v. Schuh, 206 Mich. 133.
•The record discloses that the father of the defendant, whose possessory rights defendant claims to have acquired, owned the land adjoining this strip on the east for many years. There was no fence separating it from his land, and there is proof that he made such use of it as was usual of uncleared land forming part of a farm, and claimed it as his own. To rebut the effect of this evidence, the plaintiffs made proof that defendant’s father was supervisor of the township in which the land lies in 1902, 1903, 1904, 1912, and 1916, and that he assessed the whole of lot 3 to the then holder of the record title thereto, and that she paid thé taxes thereon. Defendant meets this with proof tending to show that his father was not aware that lot 3 included the strip in dispute, and that, when he so learned, in 1918, he asked that the strip be assessed to him.
Possession, to be adverse, must be hostile. The owner of this land would not be chargeable with notice that such occupancy as defendant’s father had was intended by him to be hostile, when he assessed it to her for the five years stated. He must have, known that, when she paid the taxes pursuant to such assessment, she did so in the belief that she was the undis puted owner thereof. Croze v. Quincy Mining Co., 199 Mich. 515; Seifferlein v. Foerster, 218 Mich. 179.
After a careful reading of the record, we cannot say that the finding is against the clear weight of the evidence.
The judgment is affirmed.
Flannigan, C. J., and Fellows, Wiest, Clark, McDonald, and Bird, JJ., concurred.
The late Justice SNOW took no part in this decision. | [
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Wiest, J.
Defendant, a funeral director, closed the door of a Lincoln sedan — the last car in a funeral procession ready to start for a cemetery — and caught fingers of plaintiff in the door jamb. The car was not one furnished by defendant but he assisted plaintiff to enter. Because of others in the car plaintiff was still standing when defendant closed the door. A verdict having been directed against plaintiff, we omit reference to the defense.
Was the happening a mere accident or was it occasioned by defendant’s negligence, and, if so, was plaintiff free from want of care? The circuit judge thought it a mere accident but, if actionable, plaintiff was guilty of contributory negligence.
While counsel for plaintiff do not claim that defendant, acting as funeral director and superintending the formation of the funeral procession and accommodation of persons, was a common carrier, they do insist he was a private carrier and cite cases against carriers. A funeral director, superintending the formation of a procession of automobiles furnished by others, and assisting persons to enter such vehicles, does not sustain the relation of a carrier, public or private, to the persons using the vehicles. Defendant, however, was bound to exercise reasonable care, but was not required to search for careless acts committed by plaintiff. Counsel for plaintiff call our attention to cases relative to common carriers and seek, by analogy, to establish the negligence of defendant. While the books contain many cases holding common carriers liable for injuries to passengers occasioned by the acts of servants who should know that the passenger was in position where the closing of a door would cause injury, the rule is equally well settled that a common carrier is not liable where the servant had no reason to believe the passenger was in a position to be injured by the closing of a door. The closing of the door after plaintiff had entered the car was a usual and proper act, and defendant was not bound to anticipate so unusual an occurrence as plaintiff placing. her fingers in the door jamb. Plaintiff was not confronted with a sudden emergency in which she might be excused from acting with care.
Many of the cases cited by counsel for plaintiff employ the doctrine res ipsa loquitur, and for that reason cannot be considered in this jurisdiction where that doctrine is not recognized. Even should we hold defendant á carrier, he is not liable.
In Hines v. Railway Co., 198 Mass. 346 (84 N. E. 475), a station platform guard in closing a car door from outside caught the fingers of a passenger in the door jamb. The court stated:
“Nor was the act of shutting the door a negligent act. He saw* that all the passengers were in, and he had no reason to anticipate that any passenger already in would place a hand on the jamb of the door.”
The court pointed out the nonapplicability of Carroll v. Railway Co., 186 Mass. 97 (71 N. E. 89), cited in the case at bar by counsel for plaintiff.
In L’Hommedieu v. Railroad Co., 258 Pa. 115 (101 Atl. 933), a passenger, when his station was called and the car door into the vestibule was opened by a trainman, went into the vestibule, and, to steady himself, placed his right hand against the jamb of the car door with his fingers in the space between the door and the jamb.
“Before the station was reached, the trainman who stood in the vestibule in front of the plaintiff reached into the car and pulled shut the open door upon the plaintiff’s fingers.” * *' *
The court held:
“There is no proof that the trainman actually saw the position of the plaintiff’s fingers, nor is there any contention that he acted wantonly, as he must have done if he had seen, but the claim is advanced, as, the foundation of liability, that he ought to have seen and in the exercise of due care for the safety of the passenger should not have closed the door without warning or other precaution. We cannot sustain this view. * * * He was under no obligation to see where the plaintiff’s fingers happened to be, nor fore-' see any reasonable probability of their being placed in such a precarious position.”
See, also, Texas & Pac. R. Co. v. Overall, 82 Tex. 247 (18 S. W. 142).
We think the reasoning of these cases decisive of the question at bar. There is no claim that defendant saw the position of plaintiff’s fingers. The claim is he could have seen the position of plaintiff’s fingers had he made observation. Plaintiff had entered the car, and it was not a negligent act for defendant to close the door. Plaintiff did not establish negligence on the part of defendant. We, therefore, do not pass upon the question of plaintiff’s contributory negligence. We are mindful, however, that the peril to fingers in a door jamb is not only obvious but one of the first lessons taught by experience in childhood.
The judgment in the circuit is affirmed, with costs to defendant.
North, Fellows, Clark, McDonald, and Sharpe, JJ., concurred.
Chief Justice Flannigan and the late Justice Bird took no part in this decision. | [
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Fellows, J.
(after stating the facts). It is first insisted that as matter of law osteopaths are not physicians, hence the answer to questions 17 and 19 are not false. But in both questions the words “physician” and “practitioner” are used, and turning to the act regulating the practice of osteopathy (2 Comp. Laws 1915, § 6740 et seq.) it will be noted that they are referred to in the title as “practitioners” and in the body of the act as osteopathic “physicians.” To the average layman they and the “regulars” are all doctors who are consulted in case of illness, and it is doubtful if he ever makes in his own mind the fine distinction in which we are asked to indulge. In People v. Lewis, 233 Mich. 240 (42 A. L. R. 1337), we affirmed the conviction of a chiropractic practitioner who administered no medicine or drugs, for a violation of the medical practice act (2 Comp. Laws 1915, § 6724 et seq.). It was the duty of the insured in answer to questions 17 and 19 to inform the company of consultation with and treatments by osteopathic physicians and practitioners as well as by “regulars.” The average layman does not differentiate between them and in view of the form of the question we should not.
It is also insisted that the illness of insured for which Dr. Freeman treated him was not serious and that his representations were made in good faith. Defendant’s counsel relies on the following cases: Brown v. Insurance Co., 65 Mich. 306 (8 Am. St. Rep. 894); Hann v. National Union, 97 Mich. 513 (37 Am. St. Rep. 365); Plumb v. Insurance Co., 108 Mich. 94; Tobin v. Modern Woodmen of America, 126 Mich. 161; Pudritzky v. Supreme Lodge, K. of H., 76 Mich. 428; Blumenthal v. Insurance Co., 134 Mich. 216 (104 Am. St. Rep. 604); and section 17, chap. 2, pt. 3, Act No. 256, Pub. Acts 1917 (Comp. Laws Supp. 1922, § 9100 [161]). All of the cases were actions at law. In the main they involved the question of whether a case was made for the jury, and likewise in the main they involved representations of “good health” or “sound health.” None of them were cases where we were required to find the facts as well as decide the law. It is quite easy to see that one may regard himself in good health, physically fit, and so honestly state, although he is as matter of fact afflicted with a fatal malady. But the consultation with a physician, the taking of 15 treatments for an ailment are facts, and facts occurring so recently before the application was made in the instant case as to make it difficult to understand how in a good-faith effort to truthfully and fully answer the questions they were overlooked. As was said by the Supreme Court of the United States in Mutual Life Ins. Co. v. Hilton-Green, 241 U. S. 613, 624 (36 Sup. Ct. 676) :
“Beyond doubt an applicant for insurance should exercise toward the company the same good faith which may be rightly demanded of it. The relationship demands fair dealing by both parties.”
This was not a case of a slight cold or a little colic which did not affect the applicant’s general health, and which were not sufficiently important to in any way affect the risk. Here the applicant consulted an osteopathic physician and took 15 treatments in a little over a month’s time. The health of an applicant for life insurance is of vital importance to the insurer and questions to elicit information on the subject are proper to ask and should be truthfully answered.
In Bonewell v. Insurance Co., 160 Mich. 137, Chief Justice Montgomery, speaking for the court, said:
“These questions may or may not be of importance to insurance companies. They certainly have the right to make them material. In all lines of insurance the moral risk involved is regarded as of very great importance, and it cannot be said that an insurance company has not the right by its contract to make the questions which are here adverted to essential.”
And in Kane v. Insurance Co., 204 Mich. 357, Mr. Justice Kuhn, who wrote for the court, said:
“Whether Kane actually knew of the false statements in his application and signed statement to the medical officer becomes immaterial, he having had them in his possession, as a part of the policies, for seven months, and it was his duty to know that the representations therein contained and which constituted the inducement for the issuance of the policies, were true. Silence during the life of the policy has been held to be persuasive proof of fraudulent intent.”
In Metropolitan Life Ins. Co. v. Freedman, 159 Mich. 114 (32 L. R. A. [N. S.] 298), it was said by Mr. Justice BROOKE, speaking for the court:
“It was Jacob’s duty to know that the representations therein contained, and which constituted the inducement for the issuance of the policy, were true, and his silence during the life of the policy is persuasive proof of a fraudulent intent.”
In the final analysis, however, we are unable, to distinguish the instant case from the recent case of Bellestri-Fontana v. Insurance Co., 234 Mich. 424. It was there said by Mr. Justice WlEST, speaking for the court:
“Whether the applicant for the insurance was aware of his stomach trouble or not was of small moment at the trial, for the evidence is coficlusive that he did know he had consulted a physician about three months before and that an X-ray had been taken, and yet he répresented he had not consulted a physician within five years. He concealed a material fact by a false representation. The insurer had a right to know that he had consulted a physician, the application called for such knowledge, and if it had been imparted the insurer could have made investigation.
“We have not overlooked section 17, chap. 2, pt. 3, Act No. 256, Pub. Acts 1917 (Comp. Laws Supp. 1922, § 9100 [161]), which provides:
" ‘The falsity of any statement in the application for any policy * * * shall not bar the right to recovery thereunder unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.’
“The false statement bore a direct relation to acceptance of the risk and the hazard assumed by the insurer.”
The decree appealed from must be reversed and one here entered in accordance with the prayer of the bill. Plaintiff will have costs of both courts.
North, Wiest, Clark, McDonald, and Sharpe, JJ., concurred.
Chief Justice Flannigan and the late Justice Bird took no part in this decision. | [
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McDonald, J.
This is an appeal from a decree of the Wayne circuit court granting specific performance of a contract for the sale of certain real estate. ' The parties entered into a written agreement for the sale and exchange of a four-family flat owned by the defendants in the city of Detroit. . The consideration was $29,500, which was to be paid either entirely in cash or partly by the conveyance and assignment of vendees’ equity in certain land contracts amounting to $16,270; partly by the assumption of a $12,500 mortgage, and the balance of $730 in cash. The plaintiffs made a cash deposit of $100 and subsequently tendered the necessary conveyances and assignments of their equity in the land contracts and the cash balance on the purchase price. The defendants refused to accept the tender and to consummate the sale. Thereupon this bill was filed, and on the hearing the court entered a decree granting specific performance of the contract. The defendants have appealed.
The defendants have not favored us with a brief, but an examination of the record shows that on the hearing they urged several defenses, only one of which merits discussion. It was contended that because of deficient description the contract is not a sufficient memorandum of the sale of real estate to satisfy the statute of frauds. No objection is made to the description of the flat, but it is claimed that the lots which'the defendants agreed to take in exchange are not definitely located in any city, county, or State. These several parcels of land were described as follows:
“Lots 28 and 29 Santa Barbara sub.; lots 100 and 101 Robert Oakman, Cortland and Ford Highway sub.; and lots 475, 77, 506, 458 east of 136 and west of 136, Royal Oak Park sub.”
This description is a sufficient compliance with the statute of frauds. In Duncombe v. Tromble, 219 Mich. 8, the property was described as “Lot 95, Robert Oakman’s Livernois and Terminal sub.” Speaking by Mr. Justice Wiest, the court said:
“We think the property sufficiently identified in the receipt. Under the statute, 1 Comp. Laws 1915, § 3350, relative to land platted into lots or blocks, a title or caption to the plat is required and this is a record in the county where the land is situated as well as in the office of the auditor general of the State. The statute endeavors to prevent duplication of titles or captions. This title or caption operates as an earmark of the land so platted, and the designation in the receipt of the premises as lot 95, Robert Oakman’s Livernois and Terminal subdivision, rendered the premises easy of identification.”
The circuit judge correctly disposed of the issue. The decree is affirmed, with costs to the plaintiffs.
Flannigan, C. J., and Fellows, Wiest, Clark, Bird, and Sharpe, JJ., concurred.
The late Justice Snow took no part in this decision. | [
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Sharpe, J.
On June 8, 1923, the plaintiff visited the office of Dr. George Potter, seeking relief from pain due to sciatic neuritis. After examination, the doctor concluded that his trouble was caused by infection from the gums, tonsils, and prostate gland. Massage treatment was administered, and he was given a solution of bromide and chloral and sodium iodide to relieve his pain. He visited the doctor seven times between that date and July 9th. An injection of atropin and novocaine was administered on July 2d. He obtained no permanent relief. He called again on July 9th, and reported that he had been suffering intense pain, and, as the doctor testified, threatened to commit suicide if not relieved. The defendant, who had an office near by, was called in. He injected alcohol into the sciatic nerve in plaintiff’s- back. The result was an almost total paralysis of his left leg. There has been a p'artial recovery. The plaintiff claims to have suffered much, due to this treatment, and to have been put to great expense in seeking to get relief from the effects thereof. He brings this action to recover the damages sustained by him due thereto. The trial resulted in a verdict and judgment in his favor for $3,250. The defendant seeks review by Writ of error.
Plaintiff told in detail the treatment administered to him and the results thereof. Dr. John B. Rieger was then called, and, over defendant’s objection, the following question was put to him: .
“Now, doctor, state whether or not in your opinion, the treatment of alcohol claimed to have been prescribed and used in this case evidenced the exercise of such skill and knowledge upon the part of Dr. Curtis as should have been possessed by physicians in this community in the light of scientific knowledge in July, 1923?”
To which the doctor answered, “No.”
The defendant testified, in answer to a question:
“Well, the first thing I told him what we were going to do; then I told him he would feel an explosion— that is the way I expressed it, an explosion in his heel, probably in his heel, feeling of an explosion in his heel when the alcohol strikes the nerve.- Then I told him his leg would almost immediately become numb and flaccid; this paralysis would last from six months to a year, possibly longer; but he would have relief from these acute neuralgic pains that he was complaining of. I told him that it would gradually recover. He was very anxious to have it done. I watched him as the alcohol began to take effect after the injection. I was there at the office a few minutes after this.”
There was testimony of other doctors then present that plaintiff was fully informed of the effects of the injection and consented to it. The -defendant in no way admitted that the treatment administered was improper without such consent, although it may fairly be claimed that some of the other doctors called by him did so state.
The claim of plaintiff was thus stated in his declaration:
“Fifth: That the said defendant, well knowing his duty in the premises and wholly disregarding the same, did in a careless, unskilful and negligent manner so treat the plaintiff as to cause plaintiff’s then condition to be greatly aggravated and likewise to cause one of the legs and one of the feet of said plaintiff, and the nerves, cords, ligaments thereof and extending therefrom, to become numb, stiff, disordered, painful, and not subject to control by plaintiff and rendered practically useless and thereby made it practically impossible for the said plaintiff to walk unassisted.
' “Sixth: That because of the negligent, careless, and unskilful manner in which said defendant treated said plaintiff, the plaintiff became more sick, ill, and indisposed and was thereby caused- and obliged to secure other and further treatment.”
The court in his charge to the jury properly instructed them as to this claim and the duty of the defendant in respect thereto. He then said:
“The plaintiff has a second theory upon which he bases his case. He says that even though you should find that the use of alcohol was good medical practice, still the defendant is liable if' he did not tell the plaintiff in advance what the consequences would be.”
After referring to the denial of liability on the part of the defendant, he said:
“So that the claim of Dr. Curtis might be stated in this way: First, that the injection of alcohol was a proper medical treatment for the disease of sciatic rheumatism; and, second, that Mr. Bockoff was informed in advance of the nature of the treatment and', the possible consequences to him.”
Later, and near the conclusion of the charge, he said:
“In connection with this last proposition which I have stated to you, namely, that the defendant’s course of treatment must be. presumed tó be correct and proper until the contrary is shown, you have a right to consider the second theory of the plaintiff, namely, that even though the defendant’s treatment was proper and careful, still he may be held liable upon the ground that he did not advise the plaintiff in advance of the nature of the treatment and its probable consequences. The plaintiff submits his case to you upon those two theories, and it is for you to determine whether or not he is entitled to recover in this case upon either one of those theories. The defendant, of course, denies that he is liable upon either theory. He says, first, that the service rendered was proper and in accordance with good medical practice, and, second, that he did fully advise the plaintiff of the nature of the treatment and the possible consequences of it.”
Error in these instructions was relied on in defendant’s motion for a new trial. In disposing of it, the court said:
“In my opinion this case was tried upon the double theory. The questions asked the witnesses fairly apprised counsel for the defendant that that theory was insisted upon in the case. If it was not formally mentioned in the declaration, or in the opening statement, it surely was brought into the case by the testimony of the witnesses, including the statements of the defendant himself, and his witnesses. Accordingly, the court will grant permission to amend the declaration along the lines indicated.”
The instructions to the jury were given on November 1, 1926, more than three years after the treatment was administered. Defendant’s counsel urge that a new cause of action was injected into the declaration by the instructions without application to amend or consent thereto, that the error in doing so could not be cured by a subsequent amendment, and that in any event such new cause of action was barred by the statute of limitations.
That the “second theory” of the plaintiff, as stated by the court, did state a cause of action different in the nature of the liability and of the proofs needed to support it from that stated in the declaration, quoted above, cannot be doubted. Under .it the jury were plainly told that “even though the defendant’s treatment was proper and careful” he might be held liable “if he did not advise the plaintiff in advance of the nature of the treatment and its probable consequences.” Under this instruction the jury might have found for the plaintiff even though they were satisfied that he had not maintained the charge as stated in the declaration.
It is not within the discretion of a trial court to permit an amendment which states a cause of action barred by the statute of limitations. Gorman v. Newaygo Circuit Judge, 27 Mich. 138; Michigan Cent. R. Co. v. Kalamazoo Circuit Judge, 35 Mich. 227; Nugent v. Kent Circuit Judge, 93 Mich. 462; Wingert v. Wayne Circuit Judge, 101 Mich. 395; Flint, etc., R. Co. v. Wayne Circuit Judge, 108 Mich. 80.
The trial court relied on the holding in Draper v. Village of Springwells, 235 Mich. 168. It was there held that the omission of an averment of compliance with certain charter requirements might be cured by amendment in this court to sustain the judgment. The amendment there permitted did not state a new cause of action distinct from that set up in the declaration as does that here in question.
For the error thus committed a new trial must be ordered. The only other question likely to arise on a retrial is the admissibility of the hypothetical question put to Dr. Rieger, heretofore quoted. It is urged that, “This was no hypothetical question, upon which, alone, opinion evidence is admissible;” that by it the doctor was permitted to express an opinion upon the specific fact which the jury must decide in reaching their verdict; that it violated the elementary rule stated in Evans v. People, 12 Mich. 27, 35, that “where the court or jury can make their own deductions, they shall not be made by those testifying.” We are in accord with the rule thus stated. It may be observed that, following the above quotation, Mr. Justice Campbell also said:
“If a witness is competent to form an opinion which the jury could not, or which an ordinary witness could not, it would be absurd to reject his aid.”
The purpose of a hypothetical question in cases such as this is to place the facts assumed to be true before a witness suitably equipped by education and experience. The assumption of facts is the basis upon which the witness reaches the mental result usually called his judgment. In Spaulding v. Bliss, 83 Mich. 311, 318, it was said:
“It was for the others to give the facts as to the treatment and acts of the defendants, and it was for physicians and surgeons to say whether or not the same were proper.”
And in Rogers v. Kee, 171 Mich. 551, 557.:
“Malpractice must be substantiated by the testimony of expert witnesses in order to prevail; it being proper for other witnesses to testify as to the treat ment and acts of defendant and the province of experts, physicians and surgeons, to say whether or not the same was proper and the probable results.”
The question asked was but another way of inquiring whether the treatment was proper. It was in line with the requirement stated in Wood v. Vroman, 215 Mich. 449, 465, and, in our opinion, was a proper one to submit to the doctor.
The judgment is reversed, with costs to appellant, and a new trial ordered.
Fellows, Clark, and McDonald, JJ., concurred. Wiest, J., concurred in the result.
Chief Justice Flannigan and the late Justices Snow and Bird took no part in this decision. | [
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McDonald, J.
The plaintiffs seek a writ of mandamus commanding defendant to set aside an order denying a motion for a summary judgment and directing him to enter such judgment in an action by the plaintiffs against George A. Walters, sheriff of Wayne county, Michigan. On the 25th of August, 1925, the plaintiffs began suit by capias ad respondendum against one Lionel Alexander, who gave a bail bond in the sum of $3,000 in accordance with the statute, and. was released from custody of the sheriff. No special bail was furnished. His default was taken for failure to appear and plead and on the 12th of September, 1925, judgment was rendered against him in the sum of $3,022.50. The plaintiffs then requested of the sheriff an assignment of the bail bond. Failing to secure the assignment suit was begun against the sheriff. To the declaration filed the defendant entered a plea of the general issue. There after a motion was made for a summary judgment. This motion was denied, and the plaintiffs have asked this court for a writ of mandamus.
The following sections of - the statutes are applicable to this issue:
“If special bail be hot put in and perfected within the time limited by law, according to the rules and practice of the court, and the plaintiff be satisfied with the bail taken by the officer serving the writ, he may take an assignment of the bail bond from the officer to whom the -bond was given, and may sue thereon in his own name.” 3 Comp. Laws 1915, § 12984.
“At any time after any cause arising upon contract or judgment, or statute shall be at issue, upon motion of the plaintiff, after the usual notice to the defendant, supported by the affidavit of the plaintiff, or any one in his behalf having knowledge of the facts, verifying the plaintiff’s cause of action, and stating the amount claimed, and his belief that there is no defense to the action, the court shall enter a judgment in favor of the plaintiff, unless the defendant shall prior to, or at the time of hearing said motion, make and file an affidavit of merits. Said affidavit of merits shall state whether or not the defense claimed therein applies to the whole of the plaintiff’s claim, and if not, it shall state definitely what item or items of the plaintiff’s claim and the amount thereof, is admitted.” 3 Comp. Laws 1915, § 12581.
The affidavit filed in support of the motion for a summary judgment reads as follows:
“State op Michigan, > County of Wayne, J ss‘
“Elmer H. Groefsema, being duly sworn deposes and says that he is one of the attorneys for the plaintiff in the above entitled cause and makes this affidavit for and in behalf of said plaintiffs; that said cause of action is at issue; that plaintiffs have a good and meritorious cause of action against said defendant and that the amount claimed by the plaintiffs is as follows:
“Amount due on bond, $3,000.00.
“Deponent further says that it is his belief that there is no defense to the action.”
This affidavit is not sufficient to justify the court in entering a summary judgment. The statute requires an affidavit “verifying the plaintiff’s cause of action.” This means that the affidavit must verify the material facts necessary to support a judgment. It must furnish some proof of the plaintiff’s cause of action; and it must be made by some person who would be competent to testify to the facts upon a trial. The affidavit in question does not make proof of any facts upon which the court could base a judgment. It merely states that in the opinion of their attorney, “plaintiffs have a good and meritorious cause of action against the defendant.” It makes no reference to any of the facts alleged in the declaration and furnished the court no proof showing that the plaintiffs were entitled to a judgment. The court very propérly denied the motion.
There are no other questions which merit discussion.
The writ is denied, with costs to the defendant.
Bird, C. J., and Sharpe, Snow, Steere, Fellows, Wiest, and Clark, JJ., concurred. | [
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Cake, J.
In 1906, Rudolph Petoskey, Sr., and Huida Petoskey, his wife, became the owners as tenants by the entireties, of a farm in Bedford township, Wayne county. Said farm contained approximately 50 acres of land. They established their home on this farm and with the help of their chil dren were reasonably successful in tbeir farm operations. Neither party was experienced in business matters and each was limited in ability to read or speak the English language. In 1928, August Petoskey, their son and one of the defendants and appellants herein, was given authority by his parents to look after certain property matters in their behalf and from that time on he represented them in business transactions.
In 1938, the probate court of Wayne county appointed a guardian for Mr. and Mrs. Petoskey, on the petition of one of their sons and apparently with the assent and approval of all of the children. Rudolph Petoskey, Sr., died July 28,1939, being at that time 78 years of age, and his widow passed away in January, 1942. Following the death of Rudolph the present suit was instituted by the guardian and, after Mrs. Petoskey’s death, was continued by said guardian as administrator of her estate.
The bill of complaint alleges that, under date of October 23, 1936, certain deeds of conveyance were purportedly executed by Rudolph and Huida Petoskey, each such conveyance being in the form of a quitclaim deed, reserving a life estate to the grantors and conveying title in fee, subject to such life interest, to eight acres of land, more or less, described by metes and bounds. Each deed ran to one of the children, except that the conveyances to Anthony and August included their respective wives as grantees. It further appears from the record that because of some difficulty, real or fancied, later developing between Anthony Petoskey and his wife Viola, the deed to them was destroyed and a new conveyance executed, covering the same property as was described in the destroyed instrument, naming as grantees therein Anthony, August, and-August’s wife, Louise. This latter deed was dated in October, 1936, as were the other conveyances referred to, bnt the evidence establishes that it was prepared in the late summer or fall of 1937. All of said conveyances were delivered to August Petoskey, to be held by him for the grantees, until the death of the grantors, at which time each grantee was to receive his or her deed.
The bill of complaint also alleges that, at the time of the purported execution of the conveyances referred to, both Rudolph Petoskey, Sr., and Huida Petoskey were mentally incompetent to understand the nature and effect of the transaction, and that they were subject to' undue influence exerted against them by Anthony, August and Louise. Based on such allegations, the bill prayed that the conveyances be set aside. The five living children of the grantors and the children of a deceased daughter were made defendants and answers to the bill of complaint were duly filed.
After listening to the witnesses produced in open court by the parties to the action the trial judge came to the-conclusion that neither Rudolph Petoskey, Sr., nor Huida Petoskey was mentally competent to execute the deed's of conveyance in question, in October, 1936, or subsequently thereto. He also found that August Petoskey stood in a confidential relationship to his parents and that undue influence had been exercised, as claimed by plaintiff in his bill of complaint. It was accordingly decreed that the six instruments of conveyance, offered in evidence by counsel, should be set aside, and that Huida Petoskey was on the date of her death on January 12,1942, the owner of the land described in said conveyance by title perfect as against the defendants. From said decree Anthony, Yiola, August and Louise Petoskey have appealed. It is their claim in substance that on the issues of fact involved in the ease, the finding of the trial court is against the weight of the evidence.
On the trial plaintiff produced as a witness a physician who treated Rudolph Petoskey, Sr., during 1934, and again in September, 1936, and who expressed the opinion, based on his observation of, and contact with, the patient, that Mr. Petoskey, because of his mental and physical infirmities, was not competent to engage in a business transaction of the nature here involved during the period covered by the last-mentioned treatment. The proofs fairly establish that during 1936 and 1937, Rudolph Petoskey was in very poor health, was enfeebled both physically and mentally and was bedridden much of the time. When the last conveyance, referred to in the record as exhibit 8, was executed it appears that it was necessary to prop him up in bed to enable him to make his mark and that his condition was such that some one held his hand in order to assist him in the operation.
The testimony of the medical witness referred to is supported by other proofs, including the testimony of some of the children of the grantors, as well as testimony from disinterested witnesses. Without going into a detailed analysis of the statements made by witnesses produced on both sides, and opinions given by them, the conclusion is -fully justified by the record as made before the trial court that the determination as to the mental competency of Rudolph Petoskey, Sr., was correct.
This court, in dealing with appeals in equity, has had occasion to point out, that while such matters are heard here de novo, recognition must be given to the obvious fact that the trial judge, having seen and heard the witnesses, is in better position than is an appellate court to weigh the testimony of each and to pass on incidents arising during the trial that tend to throw light, on the matter of credibility.
In Quackenbush v. Quackenbush, 305 Mich. 704, it was said:
“We are confronted solely with issues of fact. The rule is well established that the conclusion of the circuit judge will not be disturbed when fairly supported by the testimony, inasmuch as the trial judge sees and hears the witnesses and is in a better position to judge their credibility. However, we review chancery cases de novo, and we have therefore reviewed the record in. this case to determine the equities. ’ ’
Likewise, in Lynder v. Schulkin, 305 Mich. 451, in affirming a decree of the trial court it was said:
“We are concerned only with the finding of fact by the trial court, and while we hear chancery cases de novo, we are convinced that there is competent evidence to sustain the trial court’s finding of fact upon this issue. Under such circumstances we do not reverse the findings of the trial court.”
Likewise, in Langdell v. Langdell, 285 Mich. 268, the court said:
“ ‘We hear chancery cases de novo; but we do not, and should not, reverse decrees unless we are persuaded they are not in accordance with the just rights of the parties.’ ”
As above indicated the finding of the trial court with reference to the mental competency of Rudolph Petoskey, Sr., is fully supported by the record. A careful consideration of the evidence leads to the conclusion that such finding ought not to be disturbed. This renders it unnecessary to consider whether Huida Petoskey was, in fact, also mentally incompetent at the time of the purported execution of the conveyances sought to be set aside; nor is it necessary to pass on the alleged undue influence claimed to have been exercised by certain, of the defendants. If one of the grantors was incompetent such fact is decisive of the question presented here, namely, whether the deeds referred to in the hill of complaint should be set aside. See Lynder v. Schulkin, supra; Berman v. State Land Office Board, 308 Mich. 143.
The record as made on the trial in the circuit court presents another matter to which attention should he given. As stated above, exhibit 8, the conveyance to Anthony, August and Louise Petoskey, covers the same property that by prior instrument, ostensibly executed in October, 1936, had been deeded to Anthony and Yiola Petoskey, which conveyance was, we may assume, destroyed. However, the tearing up of the instrument after a valid and unconditional delivery did not revest title in the grantors. Cook v. Sadler, 214 Mich. 582. It does not appear that there was any reconveyance to the grantors of the interest that ostensibly vested in Anthony and Yiola Petoskey as tenants by the ‘entireties at the time of the execution and delivery of the deed; nor is there any evidence in the record that Yiola gave assent to the destruction of the instrument.
The pleadings do not refer specifically to this destroyed instrument although the prayer for relief, as set forth in an amendment to the bill of complaint, asks in general terms for the setting aside of all conveyances, or purported conveyances, by the grantors of the property referred to in the bill. The decree does not in express terms provide for the cancellation of this deed. However, the record leaves no opportunity for serious question as to the situation with reference to it. To the end that the entire controversy may be definitely and finally settled the decree of the circuit court should be modified in such manner as to specifically cover the destroyed conveyance. Plaintiff may have leave to amend his bill of complaint in this regard. Decree will enter in this court in accordance with the foregoing opinion, with costs to appellee.
Starr, C. J., and North, Butzel, Bushnell, Sharpe, Boyles, and Reid, JJ., concurred. | [
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WIEST, J;
In November, 1922, plaintiffs were purchasing, under land contract, a lot on Prescott street, city of Hamtramck; they also owned another lot which they were selling on land contract and upon which there was unpaid the sum of $1,720. Desiring a new building on the Prescott street lot, plaintiffs, November 16, 1922, entered into contract with defendant Stephen Weberski under which he was to construct the building, and to pay therefor plaintiffs assigned to him their land contract interest in that lot. Weber-ski was to pay the balance of $1,925,’ as it fell due thereon, to the owner, and plaintiffs deeded to him the other lot, subject to the contract, at the fixed value of $1,720, and also paid $200, in money. This left a balance of $9,100, to be paid Weberski by plaintiffs. Weberski gave plaintiffs a land contract for the Prescott street property at the price of $9,100, to be paid in monthly installments of $50, and interest, commencing February 18, 1923; the entire amount to be paid in five years. Weberski put up the building in part and then abandoned the job, claiming plaintiffs failed to make payments on their land contract, and gave notice of forfeiture, and, September 24, 1923, commenced a summary proceeding before a circuit court commissioner to obtain possession. Plaintiffs herein, defendants therein, were served with process but did not appear before the commissioner and judgment of restitution was rendered October 15, 1923, with a finding of $876.70 due on the land contract. No appeal was taken, but October 22, 1923, plaintiffs filed the bill herein alleging fraud committed by Weberski and asked for an accounting. Upon hearing, the bill was dismissed. Plaintiffs appealed.
Plaintiffs claimed they were without remedy in the proceeding before the commissioner, and, therefore, of right ignored it and are.properly in the court of equity. We find no fraud in the making of the contract or in any of the dealings between the parties. At the most, if plaintiffs’ version is correct, there was a breach of the building contract by Weberski, with damage to plaintiffs. This defense could have been made before the commissioner both upon the question of default in payments and the amount, if any, due. If all the writings between the parties be taken as parts of one deal, and we feel they should be so taken, we see no reason, in a proceeding at law, under one part, why all parts could not be considered, and if Weberski breached his contract, and plaintiffs were justified thereby in not paying more under the land contract, then, of course, there would have been no cause for forfeiture and no right in Weberski to possession and payment. The impression seems too common, of late, that equity will undo an adjudication at law, and that one duly summoned at law may ignore the proceeding, and after determination file a bill in equity and obtain relief notwithstanding. Of course, there are subjects, determining rights, purely of equity cognizance and beyond consideration by a commissioner in a summary proceeding, but this is not such a case.
While there is no inflexible rule on this subject, some excuse of moment must exist to carry rights over to another judicial forum.
After the suit was commenced before the commissioner, and before judgment therein was rendered, Weberski assigned the land contract in that suit involved to the Anchor Pipe & Supply Company, to secure an indebtedness of $1,751.52 to that company. Plaintiffs contend that taking judgment in the name of Weberski after such assignment was a fraud upon the commissioner’s court and gave the court of equity jurisdiction. Continuation of the proceeding before the commissioner in the name of Weberski was agreeable to the Anchor Pipe & Supply Company, and its attorney was present at the hearing. At common law an assignee of a nonnegotiable demand could not prosecute remedies in his own name. The early statute in this State, allowing the assignee to do so, was permissive only. Sisson v. Railroad Co., 14 Mich. 489 (90 Am. Dec. 252); Michigan Sugar Co. v. Moffett, 183 Mich. 589. The present statute, 3 Comp. Laws 1915, § 12353, requiring every action to be prosecuted in the name of the real party in interest, may afford ground for preventing any other obtaining judgment, but does not operate as a door to enter the equity court in cases where it has not been observed. Even perjury in obtaining a judgment affords no ground for the intervention of a court of equity. Becker v. Welch, 206 Mich. 613.
During the pendency of this suit, plaintiffs paid the vendor under the contract they had assigned to Weber-ski and received a deed to the property, and now insist they face the unique situation of being put out of possession of property to which they hold a deed, if they fail in this appeal. Plaintiffs overlook the fact that their land contract with the owner had been assigned by them to Weberski and they were no longer entitled to a deed from the owner but had to deal for the title under their contract with Weberski. This complication, of plaintiffs’ own making, cannot be employed by them as a prayer for relief. We find no equitable ground for setting aside the proceeding before the commissioner. Plaintiffs should have appeared there and defended and have appealed if they felt wronged. They there had their day in court and cannot here try out what should have been submitted there.
The decree dismissing the bill is affirmed, with costs to defendants.
Bird, C. J., and Sharpe, Snow, Steere, Fellows, Clark, and McDonald, JJ., concurred. | [
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Butzel, J.
Tbe parties in,the. instant case entered into a stipulation of facts and waived a jury trial. No testimony therefore was taken. The facts that are pertinent on appeal are as follows.. On July 28, 1943, plaintiff was employed by defendant as an instructor in its technical training school at the rate of $263 per month, payable semimonthly. Such employment was not stated to be for any definite period of time. Plaintiff performed his duties as instructor until September 1, 1943, when he'was transferred with no change in salary to the service department where he remained until October 30, 1943, when he was informed that his services would no longer be needed. He was discharged and paid to October 30, 1943, the date of his discharge. ,He demanded his salary for the balance of the monthly period ending November 28, 1943. Upon defendant’s refusal, suit was brought and the judge rendered a judgment in favor of plaintiff for $251.25 and costs.
Defendant on appeal claims that there is nothing to take the case out of the rule it contends for, i.e., that a person employed for an indefinite period may be discharged at will at any time, and the mere naming of a salary or wages by the month is only indicative of the pay the employee is to receive and does not indicate any definite period of employment. The trial judge held that the hiring of an employee by the month without any other testimony as to the term of hiring created a presumption that the person was hired by the month, and when there is no testimony to overcome this presumption, the plaintiff is entitled to recover the salary for the balance of the month. Because of the importance of the question, we allowed an appeal.
Defendant, as appellant, has presented most thorough and scholarly briefs. In its main brief it has strictly adhered to Court Rule No. 68, § 5 (1945), by printing in alphabetical order an indexed list of the case.s with appropriate citations of reports. This covers 11 pages. Plaintiff also has filed excellent briefs with a large number of citations. We only-mention this to show that the courts of the various States disagree on the question though plaintiff concedes that possibly the weight of authority upholds defendant’s contention, hut insists that in many cases cited by defendant there are other facts and circumstances that were taken into consideration.
The conflict in the decisions prompted the two States of California and Georgia to enact statutes covering the subject. Labor Code of California 1937, § 3001, is as follows:
“A servant is presumed to have been hired for such length of time as the parties adopt for the estimation of wages. A hiring at a yearly rate is presumed to he for one year; a hiring at a daily' rate, for one day; a hiring by piece work, for no specified time. ’ ’
The Georgia Code of 1933, § 66-101, is as follows :
‘ ‘ That wages are payable at a stipulated period raises the presumption that the hiring is for such period; but if anything in ,the contract shall show that the hiring was for a longer term, the mere reservation of wages for a lesser time will not control. An indefinite hiring may be terminated at will by either party.”
Obviously we look to the decisions of our State, where the question has often been presented in some form. Defendant insists that the case of O’Connor v. Hayes Body Corp., 258 Mich. 280, is decisive. In the course of the opinion, it was said:
“The contract of employment, being for no definite period, was a hiring at will and could have been terminated at any time, by either party without notice. It was not terminated as a matter of law by the closing of the factory and the subsequent employment of plaintiff as a day watchman, if the parties agreed to the continuation, of compensation as claimed by plaintiff.”
It will, however, be noted upon reading the briefs and records in this case that plaintiff nowhere contended that he had more than a contract for an indefinite period. The case did not raise the point involved in the instant one. The decisive question was whether changing the rates in pay and type of work terminated the original hiring that provides for a specific amount per month. Plaintiff recovered and the judgment was affirmed by this court.
„ On the other hand, plaintiff relies upon a number of other cases, but we again find that the question has not yet been squarely ruled upon under facts similar to those here presented. One of the main cases which has been frequently quoted is that of Loew v. Hayes Manufacturing Co., 218 Mich. 595, where previous negotiations wound up in a letter in which an employer wrote to the employee that it would pay him $6,000 the first year, $6,600 the second year and $7,200 the third year, but the letter began with the statement:
“All statements or agreements contained in this letter are contingent on strikes, accidents, fires or any other causes beyond our control.”
It seemed very unlikely to make this condition if the contract were only one at will. Appellant herein claims that other circumstances leading up to the writing of the letter dispel any ambiguity in the letter and show that the intention of the parties was to bind them for a term of three years. The court quoted from the case of Maynard v. Royal Worcester Corset Co., 200 Mass. 1 (85 N. E. 877), which favors the claims of plaintiff in the instant case. Massachusetts is one of the minority States which favors plaintiff’s claims. Appellant has analyzed the case of Maynard v. Royal Worcester Corset Co., supra, and calls attention to the following words which it regards as significant:
‘ ‘ The length of the term of service reasonably inferable as the understanding of the parties, from their words, course of dealing ánd other acts, was a fact to be determined upon all the evidence. ’ ’
The court in the Maynard Case seemed to recognize that there were other facts in the case in addition to the mere renewal of employment for a period of an additional year at a salary of $5,000. a year, payable weekly.
Possibly the strongest case in Michigan is Southwell v. Parker Plow Co., 234 Mich. 292, which, however, relies upon Loew v. Hayes Manufacturing Co., supra, and cites a number of cases in this State which it is claimed have a tendency to sustain the Massachusetts rule that has been followed by the highest courts of a minority of-States and for which rule plaintiff contends.
The trial court after reviewing many of the Michigan cases concluded that the various decisions leave the question of time of termination of a contract of employment, where only the amount of salary at a certain rate by the month is mentioned, in a state of uncertainty. We turn to 2 Restatement of the Law of Agency, §442, comment “b,” which states as follows:
“The fact that a servant or other agent is employed under a contract which merely specifies a salary proportionate to units of time which are commonly used for the purposes of accounting or payment, such as a month or a year, does not, of itself, indicate that the parties have agreed that the em ployment is to continue for the stated unit of time. Such a specification merely indicates the rate at which the salary is earned or is to be paid, and either party is privileged to terminate the relationship at any time unless further facts exist. However, the fact that payment is to be made in accordance with a time unit is evidence, in connection with other relevant facts, indicating that the agreement is for such unit. Thus, an agreement for the period of time mentioned as that for payment, or as the basis for payment, is indicated if one party pays consideration aside from his promise to employ or to serve; or if the agency is an important one and of a kind such that a temporary appointment would not be likely to be made; or if, as the principal has notice, the employee has made an important change in his general relations in order to accept the position, such as the removal of himself and his things to a new place; or if he has given up a position of some value in order to enter the employment. In the absence of other facts, a custom in the business of which the parties should know, or a usage by the principal as to periods of employment of which the agent should know, is controlling.”
The Michigan annotations to the Restatement of the Law of Agency omitted reference to the decision in O’Connor v. Hayes Body Corp., supra, which defendant claims is decisive of the law of this State.
Notwithstanding this conflict of authorities and the contention of the parties as to whether the court has stated the rule for this State under similar facts, we find on one phase of the question the courts do agree. This court of its own volition asked for briefs on the further question whether, inasmuch as under the statement of facts plaintiff was originally hired as an instructor in defendant’s technical training school at the rate of $263 per month, did nofithe nature of his employment indicate that he was to be hired by the month? It is generally known that regular teachers are hired by the year or month or for a definite term. Plaintiff was not hired as a day laborer but as an instructor. ■ It is true that later his duties were changed but it is not claimed, and the stipulation of facts does not show, that there was any change in the salary or term of employment. Defendant in its supplemental brief attempts to belittle the importance of plaintiff’s original position, and to do this, goes outside the record. The ease was decided upon the stipulation of fact's and the parties are bound thereby, and may not go beyond them. Tirrill v. Miller, 206 Iowa, 426 (218 N. W. 303). The rule as laid down in the section of the Restatement of the- Law of Agency quoted, states:
‘ ‘ Thus, an agreement for the period of time mentioned as that for payment, or as the basis for payment, is indicated if * * * the agency is an important one and of a kind such that a temporary appointment would not be likely to be made.”
In Chamberlain v. Detroit Stove Works, 103 Mich. 124, we stated that the term of employment depended, among other things, upon the “nature of the services performed.” We believe that the fact that plaintiff was hired as an instructor at a certain sum per month is all important because the nature of the services performed by an instructor is such that it is not a hiring at will, but by the month, as may be implied by the fact that he was hired for a definite amount per month. With the added fact considered, we believe that plaintiff is entitled to recovery.
Judgment affirmed, with costs to plaintiff.
Starr, C. J., and Bushnell, and Reid, JJ., concurred with Butzel, J.
This provision was first enacted in California in 1872.—Reportee.
This provision appears in the Georgia Code of 1895, § 2614.— Reporter. | [
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Sharpe, J.
The plaintiff, while in the employ of the defendant, on September 20, 1921, was severely injured in a collision between two of defendant’s cars. His right leg was so badly crushed that amputation above the knee was necessary, and was performed. On January 10, 1922, an agreement for compensation was entered into, wherein the defendant agreed to pay him compensation at the rate of $14 per week for the period of 175 weeks. On October 2, 1922, plaintiff petitioned the department of labor and industry for an order that defendant be required to pay him the balance of the compensation provided for in the agreement ($789.56) in a lump sum. Defendant signed a consent to such request, and such payment was authorized and made.
On May 18, 1925, after the 175 weeks following his injury had expired, plaintiff petitioned for further compensation, alleging that, in addition to the injury to his leg, he had sustained an injury to his hip and back as a result of the accident. A hearing was had, and proofs were taken. An award was made by the deputy commissioner of $14 per week from January 27, 1925, to date of hearing, in the sum of $336, and payment was ordered to continue during total disability. On appeal to the department, this order was affirmed.
Defendant contends that—
"The petition for further compensation is the first claim ever advanced by the injured employee with respect to injuries to back and hip,”
—and that, as more than two years had elapsed after the date of the accidental injury before this petition was filed, the claim therefor is barred by the statute (section 15, part 2, Act No. 64, Pub. Acts 1919 [Comp. Laws Supp. 1922, § 5445]).
The statute above cited requires the claimant to give notice of his injury to his employer within three months after the happening thereof, and to make claim for compensation “with respect to such injury” within six months after the occurrence. Plaintiff was at once taken to the hospital and treated and operated upon by Dr. Dolman, a surgeon in the regular employ of the defendant. The doctor testified that he was then—
“suffering from a crushing injury to the right leg, also the right hip, and complained of injuries to his back. * * * He had a crushing injury to the right leg, * * * injury to the right hip, marked ecchymosis of the right hip, * * * also extending to the small of the back, the ecchymosis.”
On his attention being called to his report of the injury to the defendant, which referred only to his crushed leg, he stated:
“What is there is true. If I completed the report at the time, I would have told you that the man complained of injury to his back.”
Counsel for defendant do not claim that the information obtained by its doctor in treating plaintiff was not notice to it of the injury he had sustained. Its report to the commission of a compensable accident was based thereon. It entered into the compensation agreement more than three months after the accident without further or other notice of plaintiff’s injury.
It was the duty of the defendant to report to the commission “the nature and extent of the injury fully and in detail,” on the eighth day after the occurrence of the accident of which it had notice, and its neglect to do so is a bar to its right to raise the defense of the statute' of limitations relied on by defendant.' Section 17 of part 3 of the amendment of 1919 (Comp. Laws Supp. 1922, § 5470) above referred to. The report of the doctor to the defendant and that of the defendant to the commission should have stated that the plaintiff sustained an injury to his hip and back as well as to his leg.
The agreement for compensation was prepared by defendant’s attorney, as were all of the written instruments signed by plaintiff. He was without counsel until the removal of the proceeding to this court. This agreement, when “filed with and approved by the board, is a substitute for, and, under the statute, the legal equivalent of, an arbitral award.” Estate of Beckwith v. Spooner, 183 Mich. 323, 329 (Ann. Cas. 1916E, 886). Had arbitration been had, it would undoubtedly have revealed the fact that plaintiff sustained an injury to his hip and back and that he was claiming compensation therefor. It does appear that he was unwilling- to sign the compensation agreement for the reason that it made no provision for such injury, and that defendant’s attorney wrote the commission about it, and that plaintiff signed after assurance by the commission that it would in no way preclude his right to receive further compensation for his other injuries.
This right was also discussed at the time the order was made for a lump sum settlement. Plaintiff testified:
“When I was down here asking for a lump sum settlement, I complained to the commissioner, and I asked him in regards to signing that, though I lost my leg. I told him at that time, and I told Mr. O’Connor that my back was injured, and I said, ‘This won’t stop me, if I am not able to work?’ He said, ‘At the end of 175 weeks,’ the commissioner told me, ‘we can open up your case again.’ ”
An unequivocal claim for compensation must be made (Brown v. Weston-Mott Co., 202 Mich. 592). It need not be in writing. The reason plaintiff protested against the compensation agreement was because it contained no provision for compensation for the injury to his hip and back. That he made such a claim to defendant’s attorney cannot be doubted. The omission of any reference to it in the writings was unfortunate, but in no way conclusive that the claim was not made. It could not have been acted upon by the commission until the time fixed in the compensation agreement when the specific payments for the loss of the leg should expire. In our opinion plaintiffs claim was not barred by the statute.
The award is affirmed.
Bird, C. J., and Snow, Steere, Fellows, Wiest, Clark, and McDonald, JJ., concurred. | [
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Wiest, J.
(dissenting). Plaintiff company, by written agreement, purchased the dairy business, equipment and good will of N. H. Winans & Sons, a copartnership, consisting of Claude L. Winans, Harry H. Winans and Tberon R. Winans, paying therefor the sum of $150,000. Defendants Case G. Winans and Howard R. Winans were employees and not members of the partnership but signed the agreement of the sellers to remain out of a competing business for a period of 10 years. Por a time Case G. Winans and Howard R. Winans were in the employ of plaintiff but resigned and organized a corporation styled Winans Dairy Company, to carry on a competing business. The bill herein was filed to enjoin such competition as in violation of the mentioned agreement, signed by Case G. Winans and Howard R. Winans.
The individual defendants admit:. “That they have organized a corporation for the purpose of engaging in business for the purpose of selling dairy products in the city of Lansing, * * * and that such sales will probably be in competition with the plaintiff, but deny that such business is contrary to the express terms of said contract, and conditions of said contract, said alleged contract being illegal and void” and contrary to 3 Comp. Laws 1929, §§ 16667, 16672.
The confession and avoidance present the question of whether the invoked avoidance is good in point of law.
The circuit judge held that Case G. and Howard R. Winans were not bound by their gratuitous signing of the contract of sale and covenant for they sold nothing and received nothing. The case is here by the appeal of plaintiff. The facts are conceded.
Case G. Winans and Howard R. Winans were employees of the sellers, had no financial interest in the business but agreed, in writing, to refrain, directly or indirectly, from engaging in a competing business during the period of 10' years. They entered plaintiff’s employ and after a time quit and organized defendant corporation as a competitor, directly contrary to their covenant. They claim immunity by virtue of statutory declaration of public policy. Public policy and private pecuniary desire, in this instance, seem to coincide.
The covenant was not ancillary to any contract of sale between plaintiff and Case G. and Howard R. Winans for they sold nothing to plaintiffs and received no consideration for their covenant to refrain from competition.
“Restraining contract must be ancillary. The covenant or contract by which the restraint is imposed must be incidental to and in support of another contract or a sale by which the covenantee acquires some interest in the business needing pro tection. Contracts which have for their object merely the removal of a rival and competitor in a business are unlawful under all circumstances.” 13 C. J. p. 477.
“Where, without a sale of good will, or other legitimate dealing therewith, one party agrees with the other to abstain from business, such contract is invalid without regard to its reasonableness as to either space or time.” 2 Page on Contracts (2d Ed.), § 803.
3 Comp. Laws 1929, § 16667, provides:
“ All agreements and contracts by which any person, copartnership or corporation promises or agrees not to engage in any avocation, employment, pursuit, trade, profession or business, whether reasonable or unreasonable, partial or general, limited or unlimited, are hereby declared to be against public policy and illegal and void. ’ ’
Plaintiff contends that 3 Comp. Laws 1929, § 16672, excepts the instant covenant. The invoked part of that statute reads:
“This act shall not apply to any contract mentioned in this act, nor in restraint of trade where the only object of restraint imposed by the contract is to protect the vendee, or transferee, of a trade pursuit, avocation, profession or business, or the good will thereof, sold and transferred for a valuable consideration in good faith, and without any intent to create, build up, establish or maintain a monopoly.”
This section provides an exception to the inhibition of the previous section but clearly applies only to an ancillary covenant by a transferor.
It is accepted law in this State that a contract may be enforced by a third person for whose ben efit it is made. But where in this ease is the third party? The contract was not made for the benefit of defendants, and the third-party rule has no applicability to the case at bar. Plaintiff made the contract for its own benefit and not for that of defendants and so did the sellers, N. H. Winans and Sons. If it be held that defendants became parties to the contract for the benefit of the purchaser and the seller then they were not third parties at all. The consideration between the purchaser and the sellers did not in any part reach them. The strongest statement, available to plaintiff, is the supposition that it would not have purchased the business without defendants’ agreement not to engage in a competing business. In such case the covenant would not be ancillary to the purchase or sale but an agreement in restraint of trade and intended by plaintiff to prevent competitive business and, therefore, clearly within the inhibition of the statute. Suppose the exaction had included all others within the territory likely to engage in a competing business? Would it be held valid?
I find no authority supporting plaintiff’s claim of right to be granted relief. An extensive search has failed to find a like or similar case.
Thompson v. Andrus, 73 Mich. 551, might, at first glance, appear to be somewhat in point but, upon examination, will be found not to be so. There a father sold his hardware store and agreed not to compete with the purchaser, and his son, who was in his employ, also signed the agreement. The seller turned some of the money over to his wife and she opened a competing hardware store and employed the son. The court found the new store in the name of the wife only a subterfuge, employed by the seller in perpetrating a fraud and enjoined its operation.
The case at bar carries no intimation of any such subterfuge, for it is not claimed that plaintiff’s vendors are at all interested in the competing business.
The business and good will purchased by plaintiff belonged to Claude L. Winans, Harry H. Winans and Theron E. Winans, as co-partners, and they sold the same to plaintiff and, by permissible covenant, protected the value and use thereof from their competition. Case Gr. Winans and Howard E. Winans were not vendors of the business, nor of the good will thereof and the purpose of obtaining their agreement was manifestly to bar them from becoming competitors. The mentioned statute forbids enforcement of the covenant of Case Gr. and Howard E. Winans. See Lyzen v. Lyzen, 221 Mich. 302.
Decree should be affirmed, with costs to defendants.
Edward M. Sharpe, J., concurred with Wiest, J.
'North, J.
I think Mr. Justice Wiest’s construction of the statutory exception is too narrow. A statute should be construed so as to accomplish its obvious purpose. City of Grand Rapids v. Crocker, 219 Mich. 178. Nothing should prevent such a result if it can be attained without doing violence to the language used in the enactment.
The statute (3 Comp. Laws 1929, §§ 16667-16672) does not provide that the exception therein made applies only to “an ancillary covenant by a transferor.” Instead the exception expressly provides that the statute shall not apply “where the only object or restraint imposed by the contract is to protect the vendee.” Section 16672. To protect the vendee is exactly the object of the restraint imposed upon the defendants herein by the contract of sale. No other purpose is sought to he accomplished. About this there is no controversy in the record. Prior to the time plaintiff purchased this dairy business the individual defendants were in the employ of the vendor partners of whom there were three. These defendants were sons of one of the vendors and nephews of the other two. They bore the same family name, the name under which the business had been conducted for many years. They were substantial factors in the management of the former business. They knew the details of the business, including methods, routes, customers, etc. It is a fair inference that plaintiff as purchaser of this going business was desirous of having Case G. Winans and Howard R. Winans continue in its employ ; and they did so continue for upwards of four and one-half years. Plaintiff, paying $150,000 for this business and equipment, had ample reason for demanding incident to the contract of purchase that as vendee it should be protected against competition by these two defendants. They were made parties to and signed a sales contract which expressly so provided in the following terms:
“It is understood and agreed that the purchaser in acquiring and purchasing’ said property and business, desires to acquire, and is acquiring and taking over, the good will connected with such trade and business. In order to protect the purchaser in connection with its purchase of the property and business of said N. H. Winans & Sons, and the good will thereof, it is further agreed by each of the sellers individually and also by each of second parties individually (defendants herein) to and with the purchaser, that he will not for a period of 10 years * * * engage in the milk and/or ice cream business either directly or indirectly, in the city of Lansing, or Ingham county, of the State of Michigan.”
These two defendants are more than parties to an ancillary contract. They are parties to the one and only sales contract by which plaintiff purchased this dairy business, and these defendants for a valuable consideration moving to their father and uncles joined in that portion of the contract by which the good will of the business was sold for a valuable consideration and was supposed to be protected. By fair inference the testimony negatives the assumption that plaintiffs would have paid $150,000 for this business had they known that these two defendants who were active in its management were to forthwith inaugurate a rival business. Without the signatures of these two defendants to the purchase contract, any attempt at an effective transfer and protection of the good will would have been an idle gesture only. No one knew this better than the contracting parties. Clearly execution of this contract by these two defendants was a procuring cause of the sale and was reflected in the purchase price paid by plaintiff. The agreement thus perfected was within both the letter and spirit of the statutory exception (3 Comp. Laws 1929, § 16672); and defendants should be bound by the contract in the same manner as their father and their uncles. The obvious and admitted purpose was to preserve the good will of the purchased business. No claim is made that plaintiff sought to buy off existing competitors or to establish a monopoly. The contract which plaintiff here seeks to enforce is exactly the type covered by the statutory exception, i. e. one “where the only object of restraint imposed by the contract is to protect the vendee.” If defendants are not bound by their contract, then no one situated as were defendants’ father and uncles could negotiate a valid and effective sale of the good will of a business. But properly construed the statutory exception enables tbe vendor under such circumstances to sell tbe good will of bis business and tbe vendee to purchase the same. So construed the statute protects both. A different construction fosters fraud.
Consideration. The trial court held, as appellees contend, that there was no consideration for the promise of Case G. and Howard R. Winans. Mr. Justice Wiest refers to the execution of this contract by these two defendants as “gratuitous signing.” In this I cannot agree but instead am of the opinion there was ample consideration.
“The rule as to consideration for agreements to abstain from litigation * * * does not differ from that relating to any other contracts; there must be a benefit on one side, or a detriment suffered, or service done on the other. The benefit rendered need not be to the party contracting, but may be to anyone else at his procurement or request.” Sanford v. Huxford (syllabus), 32 Mich. 313 (20 Am. Rep. 647).
See, also, Monaghan v. Agricultural Fire Ins. Co., 53 Mich. 238, 244; Larson v. Jensen, 53 Mich. 427; Restatement of Law of Contracts by American Law Institute, pp. 80-82.
“There are many cases in which there is a detriment to the promisee with no corresponding benefit to the promisor. Sometimes the benefit is derived solely by a third person. Hence the consideration to support a promise need not involve benefit to the promisor.” 6 R. C. L. p. 655.
‘ ‘ Consideration moving from promisee, but not to promisor. The consideration may consist of a legal right which B gives up often to some third person, X, and of which A does not receive the benefit. Such consideration is sufficient.” 1 Page on Contracts, § 529.
The author adds many illustrations and numerous citations including Townsley v. Sumrall, 2 Pet. (27 U. S.) 170; United States v. Linn, 15 Pet. (40 U. S.) 290, and First National Bank of Hancock v. Johnson, 133 Mich. 700 (103 Am. St. Rep. 468). In the Townsley Case Justice Story said: “Damage to the promisee constitutes as good a consideration as benefit to the promisor.”
The same proposition is restated by Professor Page in his 1929 supplement as follows:
“A consideration which, by the terms of the contract, the promisee furnishes to a third person and not to the promisor is sufficient.” 1 Page on Contracts, 1919-1929 Supp., § 529, citing several cases.
In the instant case the equities are admittedly all with the plaintiff vendee. It should be protected and the defendants Winans required to do the honest, equitable thing, i. e., live up to their contract. On the equity phase of this case Thompson v. Andrus, 73 Mich. 551, is interesting because of the striking similarity of facts. In the Thompson Case the vendor’s son was active in the management of the hardware business which was sold to the plaintiff, but the son had no actual ownership in the business. For the recited nominal consideration of one dollar the son agreed not to conduct within 10 years a competing business in the same city. The equity court enforced by injunction the son’s contractual agreement. But the Thompson decision is not particularly helpful herein because that decision was rendered prior to the enactment of the statutory provisions which are controlling herein.
Lyzen v. Lyzen, 221 Mich. 302, cited by appellees, is not to the point here involved. There the court held, and necessarily so, that the case was not within section 16672 (3 Comp. Laws 1929) because the plaintiff was not a vendee and the defendant was neither a vendor nor an employee. Instead the controversy arose out of a property settlement in a divorce suit. The case at bar is much more like Weickgenant v. Eccles, 173 Mich. 695. See, also, Buckhout v. Witwer, 157 Mich. 406 (23 L. R. A. [N. S.] 506).
Our holding herein is not to be construed as an authority for making any and all employees of a vendor parties to a contract for the sale of a business and thereby restraining them from participation in a competitive enterprise. In order that a contract of this type may be sustained it must fall within section 16672 (3 Comp. Laws 1929), which permits such a contractual undertaking “where the only object of restraint imposed by the contract is to protect the vendee.” Suffice it to say that the facts in the instant case fall squarely within the quoted statutory provision, and plaintiff is entitled to injunctive relief against defendants Case Gr. and Howard R. Winans.
Plaintiff seeks injunctive relief against the Winans Dairy Company, a Michigan corporation, as well as against the individual defendants. While the individual defendants do not own all of the stock in the Winans Dairy Company, they own the majority of the stock, are in active management of and unquestionably completely control the corporation. The individual defendants resigned from the employ of plaintiff September 6, 1932. The defendant corporation was organized two days later and began business November 3, 1932. Plaintiff, by letter dated September 16, 1932, called defendants’ attention, at least called the attention of Case Gr. Winans, to the contract under which plaintiff had purchased and in which the individual defendants bad agreed to refrain from engaging in the milk or ice cream business either directly or indirectly in the city of Lansing prior to January 1, 1938. The bill of complaint herein was filed promptly, November 2, 1932. By their answer defendants admit that Case G-. Winans and Howard R. Winans caused to be organized a corporation known as Winans Dairy Co., that Case Gr. Winans and Howard R. Winans are directors of said corporation and executive officers thereof and have the management and control of its past and prospective operations; that they are respectively president and vice-president of the corporation; and that the defendants organized the corporation for the purpose of engaging in the business of selling dairy products in the city of Lansing. We find ample testimony in the record to overcome any presumption of good faith on the part of any of the parties concerned in the organization of this corporation. The defense is not urged that rights of innocent stockholders are involved. Instead defendants plant themselves squarely on the alleged invalidity of the contract which plaintiff seeks to enforce. As in Weickgenant v. Eccles, supra, the defendants herein have sought to use a company as an instrumentality by means of which the individual defendants hope to breach their contract with impunity. This course of conduct does not present a situation beyond the power of the court to remedy. Plaintiff is entitled to injunctive relief against the defendant corporation as well as against the individual defendants.
The decree entered in the circuit court will be vacated and one entered here granting plaintiff the injunctive relief prayed. Plaintiff will have costs of both courts.
Nelson Sharpe, C. J., and Potter, Fead, Butzel, and Bushnell, JJ., concurred with North, J. | [
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Bushnell, J.
Plaintiff had judgment after trial without a jury for $464.30, representing unpaid rentals claimed due it for the use of a “binding machine” during 1930, 1931, and 1932. This claim is based on a written agreement between the parties which provided in substance that if the purchases of binding covers, accessories and other office supplies and equipment by defendant did not aggregate the sum of $1,500 during any 12-month period, the plaintiff was to receive 15 per cent, of the amount by which the aggregate purchases fell short of the amount named. This sum was to be applied as rent for the machine furnished defendant. It is conceded that the amount of the judgment is correct, if there is any liability.
Three questions are raised by the briefs, but the decision can rest upon our determination of one of these issues. The defendant admits that the agreement provided that it should purchase all of its office supplies' from plaintiff, but it insists that on one occasion a large order given plaintiff had to be withdrawn because it could not be filled within a reasonable time, and that at other times orders were given on which delivery was so greatly delayed that the contract became impossible of performance. Consequently, it claims the annual purchases never aggregated $1,500. This situation led to a proposal on the part of plaintiff’s Detroit manager that defendant use up the binders and other materials on hand and then return the machine.
The testimony shows the machine was returned to plaintiff’s factory about February 1,1932. The contract, when introduced in evidence, bore upon its face an indorsement in red pencil, “cancelled 2-7-32. mch. retd.” Plaintiff’s witness, its former Detroit agency manager, testified that this indorsement was mad© in plaintiff’s home office. The rentals claimed were then accrued.
We held in Baker v. Lambers, 261 Mich. 86, that the vendor relinquished his right to the amounts already accrued upon a land contract when he accepted the vendee’s surrender of the premises, quoting Goodspeed v. Dean, 12 Mich. 352, as follows:
“He could not treat it as void in respect to the rights which it secured to the defendant, and valid in respect to those which it secured to himself. Having declared it void as to the land, it was void also as to the payments which it had bound the defendant to make for the land. There was nothing, therefore, upon which plaintiff could base a right of action for either the principal or the interest which had become due upon it. ’ ’
The general rule is that:
“When an executory agreement partly performed is thus mutually canceled, if any right is reserved to recover unliquidated damages arising out of a previous breach thereof, it should be reserved expressly, and that the burden is upon one who alleges such a reservation to show that this was the mutual understanding. A mutual rescission, abrogation, release, or cancellation of such a contract, without reservations, terminates it so as to preclude the recovery of damages for any previous breach thereof.” Juniper Lumber Co. v. Nelson, 133 Va. 146 (112 S. E. 564, 24 A. L. R. 247, and cases collected in 24 A. L. R. 253).
Plaintiff seemingly made no objection to the return of the machine and treated it as a cancellation of the agreement. Plaintiff denies the authority of its Detroit manager to authorize its return, yet the act of the home office was in complete harmony with that of its agent, and may be regarded as a ratifica tion of its agent’s conduct. The plaintiff, by its own act, not only put an end to performance of the contract, but also waived all right to its claim for damages for any breach thereof. 3 Black on Rescission and Cancellation of Contracts, § 704. If plaintiff intended to reserve a claim for the balance due it at the time of cancellation, that reservation should have been expressly made. Silence on its part was not sufficient.
It is not necessary- to consider the other questions raised.
The judgment is reversed, with costs and without a new trial.
Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, Butzel, and Edward M. Sharpe, JJ., concurred. | [
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Clark, J.
Plaintiff seeks discharge on habeas corpus to the warden of the State prison at Marquette, and accompanying certiorari to the commissioner of pardons and paroles and to the superior court at Grand Rapids. Indeterminate sentence, one to fifteen years, was pronounced against him on February 19, 1921. He was paroled on January 9, 1922, for two years. He violated parole and was returned to prison. On December 28, 1923, he was paroled again. For another violation he was again returned to prison. Cause urged for discharge is that the paroles were not revoked by the warden as provided by section 15866, 3 Comp. Laws 1915.
Plaintiff has overlooked Act No. 403, Pub. Acts 1921 (Comp. Laws Supp. 1922, § 182 [1-8]), giving, also, to the executive department power to terminate paroles. The record does not show whether in granting paroles the governor excluded the warden from the right to return the plaintiff to prison, unless the governor so directed, as provided by section 4 of the act. The record does show that the paroles were revoked by the executive department pursuant to the provisions of the act.
Another question is attempted but, as presented, does not require discussion.
The writs are dismissed.
Bird, C. J., and Sharpe, Snow, Stebre, Fellows, Wiest, and McDonald, JJ., concurred. | [
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Sharpe, J.
The City of Grand Rapids appeals in the nature of certiorari from the findings of the civil service board of the city of Grand Rapids wherein said board had ordered the reinstatement of Leo M. Doyle, a discharged lieutenant of police.
Leo M. Doyle was discharged from the Grand Rapids police department in December, 1942, by the then city manager, Peter A. Rammeraad. The nature of the misconduct alleged to have occurred on December 8', 1942, which resulted in Doyle’s discharge, appears in Doyle v. Kammeraad, 310 Mich. 233. The above action was for damages against the city of Grand Rapids and certain public officers of the city, We there said:
“The order dismissing the suit is affirmed, but it must be without prejudice to plaintiff’s right to a hearing in accordance with the city charter as construed in the Babcock Case (Babcock v. City of Grand Rapids, 308 Mich. 412), and without prejudice to plaintiff’s right, if any, to reinstatement, or for salary if it be found he was wrongfully discharged from his position.”
On October 10, 1944, the civil service board amended Rule 18, § 2, of its rules and regulations to provide that hearing before it on appeals taken by discharged employees shall be de novo; that the finding of any department head, city manager, board or tribunal on the correctness of any charge shall not be admissible or be considered by it; and that when an appeal is filed with the board, the city manager shall' file with the board duplicate copies of the original charges together with amendments thereto, a copy of which charges as amended shall be served by the board upon the employee and an opportunity given him to reply.
On October 23, 1944, the city manager, Walter Sack, pursuant to said amended rule served upon the civil service board duplicate copies of the original and amended charges. On the same day the .secretary of the board mailed copies thereof to Doyle.
The amended charges, in addition to containing the alleged facts pertaining to the conduct of Schaab and Doyle on the night of December 8, 1942, referred to in the Kammeraad Case, supra, contained specific charges pertaining to Doyle kicking one Pearl Harris while fingerprinting' her in September, 1941, and also charges by Ruth Sinz relative to Doyle making obscene remarks to her about her pregnant condition. On November 13, 1944, Doyle filed with the civil service board an answer to the original and amended charges; and on the following day filed a motion to be reinstated and to vacate the charges against him.
A hearing de novo on the original and amended charges was had in January, 1945, before the civil service board. At the inception of the hearing, the right of Robert M. Doyle, a first cousin of Leo M. Doyle, and the right of John E. VandenBerg, a client of the attorney representing Leo M. Doyle, to sit as members of the civil service board was challenged.
On January 22, 1945, the civil service board issued the following written findings:
“(a) Pearl Harris
This incident happened in 1941, over a year before the discharge was given out by Peter Kammeraad, the then city manager. At the time of this incident no drastic action was taken by the officials of the city or police department other than the conference Mr. Doyle had with his superiors. We therefore feel that this charge is not worthy of consideration.
'“(b) Ruth Sins
In the Ruth Sinz testimony the fact was brought out that Ruth Sinz told her story to the higher authorities and again nothing was done to discharge Mr. Leo M. Doyle at that time and no charges placed against him. We are of the opinion that this charge cannot be used against Mr. Doyle at this time. •
“(c) Joseph Schaab
This charge was the crux of the issues and its proof rested on the point as to who was telling the truth.The incredible story and the fact that no investigation was ever made regarding it and the insufficiency of the evidence, leaves no other alternative other than to find it wanting in proof. * * ■*
“Conclusion:
In summation, we must of necessity find the charges deficient in proof and lacking of any basis for discharge. It is our opinion that Leo M. Doyle be reinstated to the position which he formerly held in the Grand Rapids police department, as of January 19, 1945, with back pay for time while not employed by any person. ’ ’
The city of Grand Rapids, upon leave being granted, appeals and1 urges:
“ (1) That Robert M. Doyle, being a first cousin of Leo M. Doyle, whose appeal was being heard, was disqualified to sit as, a member of the board' hearing those charges because of that relationship and thereby made the board’s action illegal and void.
“(2) That John E. VandenBerg, being a past •and present client of Fred P. Geib, the attorney for Leo M. Doyle, was disqualified, because of that professional relationship, to sit as a member of said board hearing the charges against Leo M. Doyle, and thereby made said board’s action illegal and void.
“(3) That the civil service board in voting to allow Messrs. Doyle and VandenBerg to sit, constituted itself an illegal, quasi-judicial body and thereby made its action null and void.
“ (4) That the findings of the civil service board failed to show whether it was the action of a majority of the board or only a part thereof and, therefore, its action was null and void.
“ (5) That the civil service board in its findings admitted that it did not consider the testimony in support of the Pearl Harris and Ruth Sinz charges, and in so doing failed to consider all the evidence and thereby acted arbitrarily, capriciously and committed reversible error.
“ (6) That the civil service board wholly failed and neglected to consider the admissions of Leo M. Doyle wherein he admitted taking Schaab down to a colored prostitute section for the purpose of ‘being taken care of,’ Doyle then being a lieutenant of police, the effect of such action on the police depart ment, the law-enforcing agency of this city, and on the general public, that such conduct was unbecoming a police officer sworn to uphold the law and that such admission of misconduct in and of itself warranted his dismissal as a matter of law, leaving the civil service board no discretion to reinstate him.
“(7) That this Court has the right and duty to hold that the action of the civil service board in reinstating Doyle was null and void because of the several foregoing reasons but because of the admissions of Doyle pertaining to his own misconduct, this Court should hold, as a matter of law, that such action warrants and demands his dismissal and should, therefore, set aside the findings of said board in reinstating Doyle and uphold the city manager in his dismissal of him.”
We note that the civil service board was appointed by the city commission of Grand Rapids; and that its legal advisor was the city attorney. Before any testimony was taken, commissioner VandenBerg was asked the following question: “Do you believe and do you feel if you sit in this case as a member of the board that you could act fairly and impartially and pay no attention whatever to the fact that in some matters I (Leo M. Doyle’s attorney) have been your attorney?” He answered: “I absolutely do.”- Commissioner Robert M. Doyle was asked: “And Mr. Doyle, do you feel you can sit in this case and be fair and impartial between these parties to the same extent and in the same way as though you were not related to Mr. Leo Doyle?” He answered: “I do.” At the time set for hearing, the deputy city attorney advised the board that the hearing should not be started without a full board. Robert M. Doyle was called and the hearing proceeded.
We recognize that the rule of due process of law requires the hearing, which is a quasi-judicial pro ceeding conducted by administrative officers, be before a fair and impartial tribunal. The. city of Grand Rapids has failed to point out where it was prejudiced by reason of the fact that Robert M. Doyle and VandenBerg sat as members of the board at the hearing. Moreover, a deputy city attorney insisted that these two- commissioners attend the hearing. It is now too late to protest against the city attorney’s own action.
In view of our determination that Doyle and VandenBerg were qualified to sit as members of the civil service board, it is not material to the issue involved in this case whether the action of the board was unanimous or by a majority vote thereof. The report of the board was signed by its president and secretary. In the absence of any showing, we must assume that such report, so signed, represented the voice of at least a majority of the board. The signatures of the president and the secretary of the board show that they signed for the board and not for themselves individually.
It is next urged that the decision of the board was arbitrary and capricious in that it failed to properly consider the evidence of Pearl Harris and Ruth Sinz. The board has offered its explanation for its action concerning the Harris and Sinz incidents. The charges made by Harris and Sinz were denied by Doyle. Citation of authority is unnecessary to support the rule that on certiorari we may not review questions of fact except to determine whether there is competent evidence to support such findings. There is evidence in the record to support the findings of fact concerning the charges made by these two witnesses.
It is also urged that Doyle’s admitted conduct prevents his reinstatement as a matter of law. The substance of his admissions were that while off duty he used his car to drive Schaab to a district in the city of Grand Rapids wherein there may be found houses of prostitution. The civil service board failed to find in these admissions sufficient cause for Doyle’s discharge. It chose to find in such admissions only a good-natured acquiescence in a request to accommodate an old acquaintance upon a personal errand. The right to place this interpretation upon the admitted actions of Doyle rests solely with the civil service board. On certiorari we are not at liberty to determine disputed questions of fact, nor to review the weight of the evidence. The office of certiorari is to review questions of law. We are only concerned with the determination of whether or not there was substantial evidence to support the findings of the board. The action of reinstating Doyle to his former position in the police department is the act of the civil service board and of no other agency of government.
There being some substantial evidence to support the findings of fact by the civil service board, its action is affirmed, with costs to Leo M. Doyle.
Starr, C. J., and North, Bhtjzel, Bushnell, Boyles, and Reid, JJ., concurred'. The late Justice Wiest took no part in the decision of this case. | [
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Boyles, J.
On March 31,1941, a petition in bankruptcy was filed against Edward M. Stout; on September 25, 1941, he was adjudged a bankrupt; and on October 31, 1941, Ralph Becker, plaintiff and appellee, was appointed as the trustee in bankruptcy. On April 1, 1942, the trustee filed the present suit in chancery to set aside certain, conveyances of real estate to the defendants herein on the ground that Edward M. Stout was insolvent at the time they were executed and delivered and that they were executed and delivered with intent to hinder, delay and defraud his creditors. ■ The bill of complaint also asked for an accounting, and an injunction to restrain the defendants from encumbering or disposing of the real estate in question. The bill of complaint was taken as confessed .by defendants Ward and. Aliene Partridge who did not appear or answer. The case was heard in open court as against defendants Edward M. Stout and his wife, Grace. Stout. The court filed an opinion finding that Stout was insolvent at the time the conveyances were executed and delivered, that the conveyances were made with intent to hinder, delay and defraud the creditors of Edward M. Stout within the meaning of the fraudulent conveyance act, and were null and void. Prom a decree entered in accordance with the opinion, defendants Edward M. Stout and Grace Stout appeal.
Two questions secondary to the main issues are raised by appellants:
(1) Should the bill of complaint be dismissed as a bill in aid of execution? The suit has a secondary aspect as a bill in aid of execution in that the trustee claims to be a judgment creditor of Stout. One of the creditors represented by the trustee in bankruptcy is Hugh A. McPherson, receiver of the Pontiac Commercial & Savings Bank. The receiver had obtained a deficiency decree against Stout in a mortgage foreclosure suit in chancery, the decree being entered in favor of the Reconstruction Finance Corporation which at that time held an assignment of.the assets of the bank as security for a loan. Subsequently, and before plaintiff was appointed trustee, the bank paid off the Reconstruction Finance Corporation loan and obtained reassignment of all its remaining assets, including the deficiency decree. The deficiency was not paid by Stout and the receiver caused a writ of fieri facias to be issued and levied on Stout’s real estate. McPherson, as receiver, succeeded to all the rights óf the Reconstruction Finance Corporation. Plaintiff, as trustee in bankruptcy, stands in place of the receiver who was the real party in interest in the attempt to collect the deficiency from Stout. Defendants’ motion to dismiss the bill of complaint as a bill in aid of execution was properly denied. The .chancery court, having jurisdiction over the main issues in the case, may grant the incidental relief essential to an effective disposition of the entire matter.
(2) Appellants claim that the suit is barred by the statute of limitations as to three certain parcels of real estate involved. The Partridges paid no consideration for two of these parcels deeded to them by Mr. Stout imT9'35, and in 1937 conveyed them to Grace Stout, wife of Edward M. Stout. "Ward and Aliene Partridge did not contest this suit, and Ward, testifying, admitted that he was merely a nominee in the transaction “through some arrangement between Mr. and Mrs. Stout,”—also “Well, I knew I was acting—we were acting simply as nominee and that they were to be reconveyed to Mrs. Stout as it was my understanding. ’ ’ Grace Stout testified that when Mr. Stout deeded these parcels to Partridge she “wasn’t quite satisfied with the property * # * at the time Mr. Partridge took this property over for me I wasn’t quite satisfied.” All four of these parties are before the court. Grace Stout acquired the title within the six-year period during which the cause of action is not barred. Equity will look through the subterfuge of deeding the property to the Partridges to reach the real parties in interest. A somewhat similar situation arose as to parcel 68— a vacant lot, in which title was apparently taken by the Partridges in 1935 and paid for with $50 furnished by Mr. Stout. The deed from the grantors to the Partridges was not acknowledged or recorded, and later the Partridges gave a deed of the parcel to the Stouts. Defendants’ motion to dismiss as to these parcels on the ground that the suit was barred by the statute of limitations was denied. We are in accord. Whatever interest Edward M. Stout had (if any) in these parcels passed to the trustee in bankruptcy, and the court has jurisdiction in chancery to determine the validity of the transfers. While statutes of limitation by analogy apply in equity, they do not strictly control the question as to whether an action is barred in chancery by laches or equitable estoppel.
The controlling issues in this case are (1) whether Edward M. Stout was insolvent within the meaning of the fraudulent conveyance act (3 Comp. Laws 1929, §§ 13393-13396 [Stat. Ann. §§ 26.882-26.885]) when the conveyances in 'question were made during the years from 1935 to 1938; and (2) were they made with intent to hinder, delay and defraud his creditors ¶ The first is a question of fact, and the second is a conclusion to be drawn from the facts.
Stout had been a resident of the city of Pontiac for many years, married defendant Grace Stout in 1898, was in the business of buying and selling real estate during the period of the rapid growth and expansion of Pontiac as an industrial center. He acquired title and interests in a large number of parcels of real estate, both in his own name and in the names of business associates and partners. Prior to the closing- of the Pontiac Commercial & Savings Bank and the appointment of Hugh A. McPherson as receiver in 1931, Stout was an extensive borrower of this bank in his own name, and in conjunction with business associates. Such borrowings were evidenced by indirect liabilities, where Stout discounted notes to the bank on his indorse ment, by direct liabilities evidenced by his note as maker, and by mortgage loans evidenced by notes secured by mortgages.
Beginning in 1926 Stout maintained a bank account with the Pontiac Commercial & Savings Bank in the name of Edward M. Stout and Grace Stout, his wife. This was the only account Edward Stout as an individual, or Edward Stout and Grace Stout jointly, had at any time and was used as a depository of funds derived from Stout’s individual business dealings as well as for all funds derived by Edward M. Stout and Grace Stout in their alleged joint dealings. Between 1927 and 1931 this account received the proceeds of bank loans made to Edward M. Stout individually in the sum of $99,690.78. In addition, numerous proceeds of indirect loans to Edward M. Stout were deposited in the bank account during the same period. Prior to 1931 Edward M-. Stout acquired interest in many parcels of property and few parcels, if any, were acquired in the name of Grace Stout or Edward M. Stout, and Grace Stout by entireties. No separate books and records or bank account was kept on the few parcels which were in the-names of Stout and his wife. Mr. Stout had the management of these properties and bank account, with full authority to act therein. Mrs. Stout testified that she at no time ever had a separate estate, contributed nothing to the real estate venture through her own efforts, acquired nothing by inheritance, and knew little or nothing of the details of her husband’s business. She never had any moneys in a separate bank account prior to 1931, and in 1931 did not know how much money, if any, she had in the joint account, nor did she know her net worth individually or jointly at that time. Any interest she later acquired in property owned by her husband was without consideration from her. She was the housewife, not the business woman. On June 13, 1931, when Hugh A. McPherson was appointed receiver for the Pontiac Commercial & Savings Bank, Stout’s indebtedness to the bank amounted to $149,096.58. This indebtedness did not include indebtedness on mortgage loans held by the mortgage department of the bank.
After 1931 Edward M. Stout did not acquire or take title to any property in Ms own individual name. Certain partnership dr joint business associations were dissolved subsequent to 1931 and the title to the interests of his associates was transferred to the names of Edward M. Stout and Grace Stout, his wife, by entireties, Grace Stout individually, or to Ward Partridge and/or Aliene Partridge, son-in-law and daughter of Edward M. Stout, notwithstanding, that at such time large borrowings of such partnership or joint business association and individual borrowings of Stout .remained outstanding* and unpaid to the Pontiac Commercial & Savings Bank.
The indebtedness of Edward M. Stout to the Pontiac Commercial & Savings Bank incieased from $149,096.58 in June, 1931, to $169,634.80 in November, 1934. After 1931 all newly-acquired titles or interests in properties were taken in the names of Edward M. Stout and Grace Stout by entireties, Grace Stout, or in the names of Ward Partridge and/or Aliene Partridge, his wife.
Edward M. Stout in 1931 was in default on many of his individual obligations. The mortgage liability or encumbrances covering Edward M. Stout’s properties in 1931 amounted to $130,491.56. This indebtedness continually increased after 1931 and ultimately resulted in a loss of the properties through foreclosure. He was in default in taxes in 1931 in the sum of $33,480.12. This default increased to $56,082.56 in 1934. Ultimately many of such properties were lost to the State of Michigan by tax sale, in November, 1939. The entire liability of Edward M. Stout in 1931, as determined, was approximately $313,048.08, composed of his bank liability, mortgage liability, tax delinquency. The title to a large number of parcels of property was transferred to Grace Stout between 1931 and 1934. After the petition in bankruptcy was filed in 1941 the properties listed by Stout in his bankruptcy schedules amounted only to about .$16,000. On May 6, 1936, Edward M. Stout filed a sworn financial statement with the first National Bank of Pontiac.wherein he showed that he was insolvent. This statement showed' his properties at an estimated value of $119,680 and his liabilities at $181,534.04. On April 4, 1938, Edward M. Stout gave a sworn financial statement to the Pontiac Commercial &■ Savings Bank which again reflected complete insolvency. This statement disclosed properties of an estimated value of $18,650 and liabilities of $121,336.37.
Approximately 700 record pages of testimony were taken to show whether Mr. Stout was insolvent. No satisfactory objective can be accomplished by any lengthy statement of the many financial transactions indulged in by Mr. Stout, or the varying estimates as to the values of his property and the extent of his indebtedness. Accepting his own sworn financial statements filed with the two bank creditors in 1936 and 1938, he was admittedly insolvent. His counsel now seek to convince that these were false statements.
“A person is insolvent • when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured.” 3 Comp. Laws 1929, §13393 (Stat. Ann. § 26.882).
The circuit judge in a lengthy opinion tabulated- and reviewed the testimony and reached the conclusion that Stout was insolvent. In so doing, the trial court did not include as a part of Stout’s assets the property that had been hidden in the name of Partridge and wife. The conclusion of the trial court that Stout was insolvent when the conveyances in question were executed is fully supported by the testimony. The conduct of Mr. Stout in financial matters was not consistent with the conduct of one who believes himself solvent. ' The record is convincing that the conveyances in question were made with intent to hinder, delay and defraud his creditors.
The decree is affirmed, with costs to appellee.
North, C. J., and Starr, Wiest, Butzbl, Bushnell, Sharpe, and Reid, JJ., concurred.
See 3 Comp. Laws 1929, § 13976, as last amended by Act No. 72, Pub. Aets 1941 (Comp. Laws Supp. 1943, § 13976, Stat. Ann. 1943 Cum, Supp. §27.605).—Reporter. | [
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North, C. J.
Contestants-appellants herein seek to set aside a will executed by one Mrs. Margaret Thayer on October 8,1942, on the grounds- of mental incompetency and of undue influence. If'this is done, then seemingly a previous will executed on May 12, 1942, in which the contestants largely benefit, would be operative. The contestants, Mrs. Mary E. Dohany and Mrs. Helen B. Stevens, are two surviving sisters of Mrs. Thayer. The proponents are Arthur and Frieda Stevens, beneficiaries under the will, and Harold F. Patterson to whom the bulk of the estate was left. The contest was certified by the probate court to the circuit court where it was heard without a jury. Contestants have appealed from a judgment sustaining the will.
Mrs. Thayer was an elderly lady and.the possessor of an estate of approximately $30,000. After the death of her husband on March 2,1942, Mrs. Thayer went to live with Mrs. Dohany, and while there paid the mortgage on the house and also purchased the equity in the property from Mrs. Dohany. A short time later Mrs. Thayer left the Dohany home and went to live with the other sister, Mrs. Helen Stevens. She continued to live with Mrs. Stevens until September 19, 1942, when she left with Mrs. Frieda Stevens, one of the proponents, who took her to a hotel where she lived until her death during the night of October 13,1942.
The record is quite voluminous. It contains the testimony of 9 witnesses for the proponents and 19 witnesses for the contestants. A detailed review of all the testimony offered would serve no worthwhile purpose. There is ample testimony both from doctors and laymen to show that Mrs. Thayer had been in very poor health for a number of years, her physical well-being was rapidly deteriorating as a result of various ailments, she was mentally confused at times, she was exacting and impatient of contradiction, frequently lost the thread of conversation when being tallied to and otherwise showed signs of advanced age.
For some years Mrs. Thayer and her husband had retained a Mr. Condon as their attorney in various affairs. About three weeks- before her death, Mrs. Thayer discussed with Mr. Condon the proposition of selling the Dohany house to Arthur and Frieda Stevens at a modest price and with a small down payment. Attorney Condon advised against this because the price and down payment were, in his opinion, too low. However Mrs. Thayer persisted, and the Stevens took her on October 7, 1942, to their attorney, Wilbnr M. Brucker, a former governor of this State and a reputable member of his profession of long standing. Mr. Brucker testified that at the time of drawing up the land contract, Mrs. Thayer discussed in detail the terms of the contract and made decisions for herself concerning the contract terms.
Included in the exhibits is a letter purporting to be from Mrs. Thayer to proponent Harold F. Patterson, a friend living in Marion, Ohio. This letter requested him to come to Detroit in order to help her straighten out her affairs. Mr. Patterson came to Detroit and on October 8,1942, arranged a meeting, for the purpose of drawing up a new will, between Mrs. Thayer and Mr. Paul Voorheis, a reputable attorney of 40 years ’ practice and formerly an attorney general of this State. Mr. Voorheis testified that a conference took place in Mrs. Thayer’s room in her hotel and that during the conference Mr. Patterson was absent from the room. Further, he testified that during the conference Mrs. Thayer discussed her properties and her wishes for their disposal, referred from time to time to notes previously made, and otherwise gave Mr. Voorheis complete instructions for the preparation of the new will. The will in accord with the instructions was prepared the same day and about' 4 o’clock that afternoon was read to Mrs. Thayer and executed by her, this being done in the absence of Mr. Patterson or any other beneficiary. While the will named some 13 beneficiaries, it contains no involved or complex provisions. The disposition of each item of property is made in simple, clear and direct terms, easy of understanding. It contains a bequest of $500 to each of the contestants.
One of the well-established rules of law in this State is that any person has the right to make a will; and that so long as the person has the mental capacity to understand the business in which he is engaged, to know the extent and value of his property, to know the natural objects of his bounty and to keep these facts in mind long enough to dictate his will without prompting from others, such a person has capacity to make a valid will.
“A testator may be suffering physical ills and some degree of mental disease and still execute a valid will, unless the provisions thereof are affected thereby.” In re Ferguson’s Estate, 239 Mich. 616, 627.
Mere eccentricity of behavior on the part of the testator will not cause an inference strong enough to invalidate a will providing the above qualifying conditions are present. See In re Johnson’s Estate, 308 Mich. 366, and cases cited therein. In yiew of the comprehensive discussion of the rule as to burden of proof in a will contest, and the general rules which determine the testator’s capacity contained in Be Johnson’s Estate, supra, we need not here further discuss the subject. • 'While in the present case there is testimony which might create an inference of mental incapacity or undue influence, yet such testimony is controverted by positive testimony that Mrs. Thayer was capable of determining her own affairs, including a testamentary disposition of her property. And undue influence may not be inferred from acts of kindness. It must be proved. In Re Lacroix’s Estate, 265 Mich. 59, we said, “proof of opportunity to exercise undue influence is not alone sufficient.” On this record we cannot find that the judgment of the trial court was against the preponderance of the evidence. Instead we are in accord with the finding of the circuit judge that the will of Margaret Thayer, under the evidence of this case, should not be set aside on the ground of mental incompetency or undue influence.
The contestants claim that the evidence of Mrs. Thayer’s mental instability which they presented overcame the presumption of her competency to make a will and for that reason the burden of proof shifted to the proponents to prove competency. With this we cannot agree. While a proponent cannot rest on the presumption of capacity when competent proof to the contrary is produced, yet the burden of proof at all times rests on the, contestant to show that the testator did not have mental capacity to make the will. See In re Rowling’s Estate, 291 Mich. 218.
We have examined other questions presented by the contestants but find in them nothing which would alter decision herein. The judgment in the circuit court is affirmed, with costs, and the case remanded for further proceedings.
Starr, Wiest, Butzel, Bushnell, Sharpe, Boyles, and Reid, JJ., concurred. | [
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Butzel, J.
Plaintiff recovered a judgment of $6,000 against defendant trustee of the property of the Chicago & North Western Railway Company, referred to herein as railroad1, for personal injuries caused by a train running into an automobile in which plaintiff was riding on November 26, 1941. Plaintiff, a miner, lived in Bessemer, Michigan, and was unemployed. At the time he and a friend named Certano were driving in the latter’s car to a mine for the purpose of obtaining employment. He had worked at the Penokee mine in Ironwood, situated near the crossing involved1 in the accident. The mine had been shut down for some time. They passed the crossing, going along the county road, and on their arrival at the Ironton office they were told that the foreman or captain was at the Penokee mine. They thereupon decided to drive there and see him. At this time, about 10: 30 a. m., as they were driving in a westerly direction on the north side of the highway, defendant was moving a short train consisting of an engine and three flat cars northerly across the county road in Gogebic county. As the cars were being pushed across the road with the engine in the back, the col lision occurred. A stockpile, bus shanty, rockpile and other objects had interfered with Certano’s vision and when he finally saw the train, it was too late to avert the accident.- These obstructions leveled off a short distance east of the first railroad track. The wooden shanty was approximately 10 feet wide, 12 feet long and 12 feet high, and was situated about 50 feet east of the first track of the crossing, ap-. proximately 30 to 40 feet south of the south shoulder of the road. The testimony showed that it obstructed the vision to the left as one drove up to the crossing.
The old, county road on which Certano was driving was a well-traveled highway. Defendant realized the danger and for the past 10 years the rule and custom was for trains to stop at this crossing and send a flagman out to warn the traffic. The switchman testified that there was danger of collision if they did not stop and warn oncoming traffic. Ordinance No. 26 of the city of Bessemer required the railroad companies running their tracks through the city to keep at each railroad crossing a properly constructed gate or a flagman, et cetera. There is some testimony to indicate that there was sufficient clear space so that had Certano been carefully. watching he could have seen the train in time to avoid the collision. However, he testified that he was familiar with the crossing, having passed over it for 15 years, and that he knew that defendant usually had a flagman at the crossing in the event of an approaching train. He further testified that he looked on both sides of the road as he approached the crossing and when he reached a point about 50 feet from the crossing he looked and saw nothing. He did not see the train until he was 15 or 20 feet from the track. Thereupon he applied the brakes. When the automobile stopped, it was approximately 11/2 feet east of the nearest rail of the track. When he first saw the train, it was 4 or 5 feet south of the crossing. No warning was given by whistle or bell. The train struck the front end of the automobile on the left side and pushed it one foot to the north or right side before the train was brought to a stop. The color of the leading flat car was the same as the color of the surrounding country. The hill beyond was the same color, dark and cloudy. Plaintiff himself testified largely to the same effect, that he did not see any smoke of the engine to his left, that the view of the tracks to the south cannot be had before reaching the bus station, and that a point 15 to 20 feet from the bus station has to be reached before the tracks can be seen.- Also, at the time of the accident, his vision was cut off after the car reached a point 20 feet from the track. The automobile was not badly damaged.
Defendant claims that the driver of the automobile drove it into the flat .car so that the front left side of the automobile was badly crumpled up. Plaintiff, on the other hand, claims that the flat car ran into the automobile’s left front side. The automobile itself was only mute testimony to the fact that it was damaged. Neither the front bumper nor the tire, however, were injured. The left fender and lamp seem to have received the brunt of the collision. Even assuming that plaintiff and the driver did not exercise such caution as would be expected of them at an unguarded crossing, the crossing must be considered as one that is always guarded and we must further accept the testimony that no bells were rung or whistles blown, that no smoke issued from the locomotive, and that the train was being pushed very slowly so that it evidently made but little noise. The verdict of the jury conveyed1 such a conclusion. The facts are such that at least the minds of reason able men might differ as to whether the driver was guilty of contributory negligence or not. While the defendant failed to observe the city ordinance and its rule and custom of having a flagman warn traffic, it would not excuse conduct amounting to contributory negligence per se. It does, however, raise the question whether or not the plaintiff and his driver, under the circumstances where their view was obstructed and with the full knowledge of the practice of having a flagman, and not expecting a train near the mine which was shut down, did have a right to assume that they could proceed with safety. A jury question was presented.
Defendant insists that plaintiff and his driver saw or should have seen the train much further south of the intersection than admitted1 by them. While there is some force to this claim, nevertheless, it became a question whether under the circumstances of the instant case plaintiff could not largely rely upon defendant observing the law and its custom of protecting the crossing. Under the circumstances, plaintiff would not exercise the extreme care that would be necessary at an unguarded crossing. As stated in Motyka v. Railway Co., 256 Mich. 417, on rehearing:
“If one may place no reliance on guards and flagman, why have them ? ’ ’
It would serve no useful purpose to discuss the many cases with different factual situations referred to hy both parties. However, in Jones v. Railroad Co., 303 Mich. 114, we held that under somewhat like circumstances the question whether a driver was guilty of contributory negligence in failing to stop after reaching the point from which he had a clear vision down the track was one for the jury.
The claim is made that the verdict is excessive. Plaintiff was laid np an entire year, lost $2,400 that he might have earned during the year had he not been injured, and later worked at $5.96 instead of $6.80 per day. He was not able to perform the duties of a miner. He had not fully recovered from the effects of the accident at the time of the trial. The hospital bill was $93.65 and the doctor’s bill amounted to $150. He now has a stiff knee which might be corrected by an operation costing $350. The knee was broken in three places. The doctor thought that if plaintiff was properly treated, he could fully recover from his injuries in a period of six months. Considering also the pain and suffering and inconvenience that plaintiff was put to, we do not find the verdict of $6,000 excessive.
Judgment is affirmed, with costs.
North, C. J., and Starr, Wiest, Btjshnell, Sharpe, Boyles, and Beid, JJ., concurred. | [
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Per Curiam.
This matter arises out of injuries plaintiff sustained when struck by a golf ball at defendant’s golf course. Defendant moved for summary disposition, asserting that the action was barred by governmental immunity under MCL 691.1407(1). The trial court agreed, and plaintiff now appeals as of right. We affirm.
Although not specified in the record, the trial court granted defendant summary disposition under MCR 2.116(C)(7) and (10). We review de novo a trial court’s decision on a motion for summary disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). A motion -under MCR 2.116(C)(7) is properly granted when a claim is barred by governmental immunity and the nonmoving party has failed to allege facts that justify an exception to that immunity. Steele v Dep’t of Corrections, 215 Mich App 710, 712-713; 546 NW2d 725 (1996). A motion under MCR 2.116(0(10) is properly granted if no genuine issue of fact exists and the moving party is entitled to a judgment as a matter of law. Rice v Auto Club Ins Ass’n, 252 Mich App 25, 31; 651 NW2d 188 (2002). In reviewing a motion brought under MCR 2.116(C)(7) or MCR 2.116(0(10), we consider all the evidence, including admissions, affidavits, depositions, and pleadings in the light most favorable to the nonmoving party. Rice, supra at 30-31; Wade v Dep’t of Corrections, 439 Mich 158, 162-163; 483 NW2d 26 (1992).
Plaintiff argues that the trial court erred by determining that the proprietary function exception to governmental immunity did not apply. We disagree. Generally, governmental agencies are immune from tort liability. MCL 691.1407(1). However, MCL 691.1413 provides that governmental immunity does not apply “to actions to recover for bodily injury . . . arising out of the performance of a proprietary function . . ..” That same section defines “proprietary function” as “any activity which is conducted primarily for the purpose of producing a pecuniary profit for the governmental agency, excluding, however, any activity normally supported by taxes or fees.” Id. Thus, to be a proprietary function, the “activity (1) must be conducted primarily for the purpose of producing a pecuniary profit, and (2) it cannot be normally supported by taxes and fees.” Coleman v Kootsillas, 456 Mich 615, 621; 575 NW2d 527 (1998). Two considerations are relevant to the first prong of this inquiry:
First, whether an activity actually generates a profit is not dispositive, but the existence of profit is relevant to the governmental agency’s intent. An agency may conduct an activity on a self-sustaining basis without being subject to the proprietary function exemption. Second, where the profit is deposited and where it is spent indicate intent. If profit is deposited in the general fund or used on unrelated events, the use indicates a pecuniary motive, but use to defray expenses of the activity indicates a nonpecuniary purpose. [Herman v Detroit, 261 Mich App 141, 145; 680 NW2d 71 (2004) (citations omitted).]
Our review of the record shows that defendant’s golf course is not a propriety function within the meaning of MCL 691.1413 because there is no genuine issue of material fact about whether the golf course is “conducted primarily for the purpose of producing a pecuniary profit . . ..” Coleman, supra at 621. Although the parties dispute whether the golf course generates a profit, the record shows that any revenue the golf course does generate is intended to be applied to its operation and its bond service obligation. This debt was incurred in the mid-1990s when the golf course was reconstructed as part of the golf course development project, which also included the development of a surrounding residential community. Nonetheless, the golf course has operated at a loss since the fiscal year ending in 1995, and defendant’s finance director, Mr. Raymond Cochran, noted that other city revenues have been used to meet the golf course’s obligations.
Given these facts, we are not persuaded that this use of the golf course’s revenue shows a pecuniary motive. Any revenue from the operation of the golf course was not deposited in a general fund or used on unrelated events. Herman, supra at 145. Rather, revenue was to be used in a self-sustaining manner — to meet operation costs and to service the debt incurred during redevel opment. Id. We see no merit in plaintiffs contrary contention that the golf course’s revenue was to be used on “unrelated events” because it was intended to extinguish the bonds issued to finance the housing component of the development project. Rather, the record reflects that the development of surrounding housing was part of the development project and, therefore, it is not an unrelated event. Further, Mr. Cochran stated in his affidavit that “[g]olf course revenues have never been budgeted in an anticipatory fashion for use by other City departments or divisions . . . and have not been considered as a basis to reduce tax millages nor to fund other City operations.”
Viewed in the light most favorable to plaintiff, the evidence does not show that that the golf course was operated “primarily for the purpose of producing a pecuniary profit. ...” Coleman, supra at 621. Accordingly, the operation of the golf course is not a proprietary function, and the trial court properly ruled that plaintiffs action is barred by governmental immunity.
Affirmed.
In opposition to defendant’s motion for summary disposition, plaintiff presented an affidavit prepared by an accountant. The affidavit was neither signed nor notarized. This deficiency was brought to plaintiffs attention in defendant’s reply, but there is no indication in the record that the defects were cured. Because the affidavit does not comply with the court rules, we do not consider it. MCR 2.113(A); MCR 2.114(C)(2). | [
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Sharpe, J.
This is an appeal from a judgment for defendants upon their motion for a directed verdict.
Plaintiff, the Gratiot Lumber & Coal Company, is a Michigan corporation engaged in the retail him ber and Supply business in tbe city of Detroit. Defendants Anthony A. and Agnes Lubinski were engaged in modernizing a tavern. Defendant Andrew Musetti, Sr., supervised the modernizing of the tavern for Anthony A. and Agnes Lubinski. Defendant Andrew Musetti, Jr., son of Andrew Musetti, Sr., was employed as a salesman for plaintiff company.
During the months of April, May and June, 1941; Andrew Musetti, Jr., permitted the delivery to Anthony A. and Agnes Lubinski of approximately $900 worth of material contrary to the requirements of plaintiff company that credit may only be extended when there is a signed order passed upon favorably by its credit bureau.' When this condition of affairs was called to the attention of the manager of plaintiff company a signed order was procured from Anthony A. and Agnes Lubinski, but before the credit report was examined and rejected more materials wefe delivered. At this time materials to the extent of $1,506.20 had been delivered, a part of which were taken from plaintiff’s yard by defendant Anthony. A. Lubinski personally.
Defendants Lubinski had engaged Andrew Musetti, Sr., to superintend the work of modernizing the tavern. Anthony A. Lubinski admitted owing the bill and signed the receipt for the materials. Shortly after the last material was delivered to defendants Lubinski a writ- of garnishment had been served on them, as garnishee defendants, in an action against Andrew Musetti, Sr. A disclosure was filed by Anthony A. Lubinski in which he acknowledged owing Andrew Musetti, Sr., $1,405.70 on contract as a general contractor for labor, material and services. Between the time of the delivery of materials and the filing of the present suit the Lubinskis sold a piece of property located in Detroit. The tavern where the materials were delivered was located in the city of East Detroit. Upon the refusal of defendants to pay for the materials plaintiff company filed its declaration in trespass on the case, setting forth but one count, in which it is alleged a fraudulent conspiracy on the part of all defendants for the purpose of obtaining lumber and materials from plaintiff company with intent to defraud plaintiff company.
Defendants Lubinski filed an answer in which they denied owing plaintiff company any sums, and alleged that they were obligated to the defendant Andrew Musetti, Sr., as a general and independent contractor and that all sums owing him were impounded by a writ of garnishment. Subsequently, defendants Lubinski filed a motion to dismiss plaintiff’s declaration on the ground that these defendants and plaintiff company have no contractual relation between them, and because plaintiff’s cause of action lies solely against defendants Andrew Musetti, Sr., and Andrew Musetti, Jr. An order was entered denying defendants’ motion to dismiss the declaration, and the cause proceeded to trial. During the course of the trial defendant Anthony A. Lubinski testified as follows:
“When the first material was delivered I got the invoice that accompanied the shipment. I knew that it bore my name. I did not go to the Gratiot Lumber & Coal Company following the 10th of May, 1941, regarding an account for the payment for materials because I had no money to go there with. I had nothing to offer them. When I received these bills, I did not speak to Mr. Musetti about them. I am speaking now of this group of invoices. ■ I never made complaint to him about them coming in my name. * # *
“I do not deny owing any bill.
. “Q. Well, do you contend that this material was delivered on your account after you had made arrangements for it?
“A. Oh, I did not make any arrangements for it. * * *
“Q. * * * My question was, how do you explain your right to receive this material if you had made no arrangements for it?
“A. Because I spoke to Mr. Musetti, and as long as the lumber had been shipped out there I took it for granted Mr. Musetti had made arrangements for the shipment of this lumber.”
After this testimony had been received in evidence plaintiff’s attorney made a motion to waive the claimed fraud and amend the declaration to one in assumpsit. The trial court denied the motion on the theory that an opportunity had been given all parties to amend the pleadings when the cause came up on the pretrial docket, and for the further reason that Anthony A. Lubinski had filed a disclosure that he owed Andrew Musetti, Sr., as a general contractor, and that the Lubinskis could not interplead until the tort action had been dismissed.
Further testimony was taken and at the close thereof defendants’ attorney moved for a directed verdict, which was granted. Plaintiff company appeals and urges that the trial court was in error in holding that plaintiff had not proved fraud on the part of the defendants, and for failure to permit plaintiff company to amend its declaration from an action of trespass on the case to an action in assumpsit.
We are in accord with, and the record supports the following statement of the trial court:
“I do not think there is any evidence here that raises any ground for submitting to you the question whether or not there was such a fraudulent conspiracy entered into between these three parties or these four parties.
“Mr. Lubinski never dealt directly with the Gratiot Lumber [& Coal] Company. He and the two Musettis met. He told them what he wanted to have done. Andrew Musetti, Jr., was there. He was there in his capacity as a salesman for the Gratiot Lumber [& Coal] Company. He took his memoranda as to the materials that were needed. At that time he did not get a written order from the Lubinskis. That was his fault. He is a salesman for the plaintiff company, he is representing the plaintiff company, and if he makes an error of judgment or forgets 'to do what his instructions call for him to do, that is not chargeable against the Lubinskis, under the testimony in the case. That is his fault, for which he is responsible to his employer, but it is nothing that the employer can lay up as against the Lubinskis. The only thing, under the testimony, that Anthony'Lubinski asked for at the hands of the Gratiot Lumber [& Coal] Company through Andrew Musetti, Jr., was, as Mp. Musetti, Sr., testifies, whether or not Musetti, Jr., could get him 60 or 90 days credit. That was all of the talk that took place between them. Andrew Musetti, Jr.,, went back to the company and he put in orders for the delivery of the goods, but he did not have a signed order from either Andrew Musetti, Sr., as contractor, or from Anthony A. Lubinski, as owner of the property. He should have had such an order as that under the rules and practice of the Gratiot Lumber [& Coal] Company, but there is not one syllable of testimony in the case to show that Anthony A. Lubinski knew anything at all about that practice, not a syllable. And if he did not know it was the duty of Andrew Musetti, Jr., to get such an order and lay that order on Mr. Striffier’s desk, nothing can be charged up against them if he did not get that order and if he did not present it to Mr. Striffler. That is a failure on Ms part to perforin Ms duty to the Gratiot Lumber [& Coal] Company.”
The statute and rule relating to amendments are as follows:
“The court in which any action or proceedings shall be pending, shall have power to amend any process, pleading or proceeding in such action or proceeding, either in form or substance, for the furtherance of justice, on such terms as shall be just, at any time before judgment or decree rendered therein. The court at every stage of the action or proceeding shall disregard any error or defect in the proceedings, which do not affect the substantial .rights of the parties.” 3 Comp. Laws 1929, § 14144 (Stat. Ann. § 27.838).
“If after a verdict or judgment it appears in any action that a different cause of action has been proved and should have been pleaded, a new count setting up the cause of action so proved may by leave of court be added to the declaration by amendment, and the verdict and judgment shall stand.” Court Eule Nó. 19,- §4 (1933).
In furtherance of justice, trial courts should give -the statute of amendments a liberal construction.
See Okulich v. Goldman, 239 Mich. 569.
In Grant v. National Manufacturer & Plating Co., 258 Mich. 453, we said:
“As a rule, the permission to amend rests wholly within the discretion of the trial court, and unless this discretion is abused, we will not interfere. This is true irrespective of whether the court refuses or permits the amendment.”
In M. M. Gantz Co. v. Alexander, 258 Mich. 695, we said:
“The right to permit amendments, in accordance with the statute, is vested in the sound judgment and discretion of the trial court. It aims to abolish technical errors in proceedings and to have eases disposed of as nearly as possible in accordance with the substantial rights of the parties.”
See, also, Johnson v. Fremont Canning Co., 270 Mich. 524.
In Annis v. Reiser & Co., 209 Mich. 512, plaintiff brought suit on the theory of rescission of a fraudulent contract. During the trial plaintiff moved to amend his declaration and proceed on the theory of damages for fraud and deceit. The motion was. granted. The measure of damages was different under the original and amended declaration. "We there said:
‘ ‘ Granting that the allegations of the declaration as originally drawn were on the theory of rescission, it was afterwards amended to conform to the theory of damages. Had plaintiff persisted in his claim of right to recover under the theory of rescission and no amendment been made, undoubtedly defendants would have been entitled to a directed verdict, but as there was no rescission and the declaration was amended and proof made thereunder we see no reason for a directed verdict on this account. The thing sought to be recovered was the same after amendment as before, and both declarations depended upon substantially the same state of facts. It is true that the case outlined in the amended declaration is one of tort, but after setting forth the facts which constituted the basis of his claim he elected to recover in assumpsit as he had a right to do under section 12350, 3 Comp. Laws 1915.”
The above case must be considered as an authority for permitting an amendment from an action for rescission of a contract to a tort action, where there is no showing of surprise or injustice.
It is to be noted that under the pleadings defendant Anthony A. Lubinski claimed he was indebted to Andrew Musetti, Sr., for the materials furnished, and we must assume that when the cause came before the pretrial docket no changes were made in his claims; but when the cause came on for trial, and after some testimony had been taken, defendant Anthony A. Lubinski claimed that he did not know to whom he was indebted for the materials. He testified as follows:
“Q. And then when the materials were delivered, he (Musetti, Sr.) told you that you would have to pay the bills directly to the material people on the 10th of the month following delivery, that is right, isn’t it?
“A. That is right.
“Q. You got all this material from the Gratiot Lumber & Coal Company up to the time you were told, or up to the time you signed Exhibit % (purchase agreement), and you never made any complaint about the manner in which these delivery tickets were made out, did you?
“A. No, sir. * * *
“Q. Didn’t you consider you owed the Gratiot Lumber & Coal Company that money?
“A. I assume I did, yes.
“Q. And you assume now it is owing to the Gratiot Lumber & Coal Company, do you not?
“A. That is right.”
It appears that the first opportunity plaintiff company had to meet this new theory was during the trial of the cause. The only issue is whether Lubinskis are indebted to plaintiff company.
Under the circumstances in this case, plaintiff was entitled to amend its pleading and proceed with a less stringent remedy. It was reversible error to deny plaintiff this privilege: The judgment is reversed, with costs to plaintiff.
Starr, Wiest, Butzel, Bushnell, and Boyles, JJ., concurred with Sharpe, J. | [
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Btjtzel, J.
Plaintiff is the owner of a building containing approximately 65 apartments in the city of Detroit, Michigan. On April 1, 1944, defendant signed a written rental agreement for apartment No. 216. One of its provisions is “That no dogs or cats shall be permitted in the apartment. ’ ’ Another provided for the 're-entry by the owner in case of objectionable conduct on the part of the tenant. Subsequently defendant, at the request of plaintiff, gave up her apartment and took apartment No. Ill in its place. She again signed an agreement with similar provisions. While in the first apartment, defendant became the owner óf a very small Mexican dog. The caretaker did not object. When she moved to apartment 111, a new caretaker, who had taken charge, objected to plaintiff’s keeping the dog in the apartment. Defendant claimed that when she signed the new agreement, she gave up the first apartment to favor plaintiff, that she took the new apartment with the express understanding that she could keep the dog, as she needed one to warn her against intruders because the window of the apartment opened onto a fire escape and she feared that someone might break into her apartment; that, also, for sentimental reasons, she was attached to the dog. The rental agreement appears to have been only from month to month but because of the.Office of Price Administration rules, the agreement could not be terminated except for violation of its terms. Plaintiff, however, had a right to repossession under the O.P.A. rules if there was a violation of the terms of the agreement. Defendant was notified that she would have to get rid of the dog or vacate the apartment. She refused to do either. Suit was brought before a circuit court commissioner and defendant prevailed. She ‘ also won on an appeal to the circuit court.
The trial court held that a slight violation of the agreement would not warrant an ejectment but there must be a substantial violation; that the harboring of a dog might or 'might not be a nuisance; that in any event there had been no right to claim a violation by reason of the fact that defendant harbored this small dog. There was some testimony that there was objection by others in regard to harboring the dog. Had the dog done some harm to other tenants or their property, claim for damages against the owner might be made, or the waiver of the clause in the lease in one instance might cause dissatisfaction by other tenants who might want to keep dogs, or by others who objected to a dog in a neighboring apartment. While there are apartments with heavy walls where no objection might be made to the keeping of a dog, nevertheless, it is not an unreasonable regulation to require that a tenant could not keep a dog in the apartment. The lease was signed by defendant and any verbal promises that she might keep a dog prior to the entering of a written agreement with an express covenant not to keep a dog would be of no avail. The rule is stated in 35 C. J. p. 1067, as follows:
“The lessor may términate the lease, pursuant to a forfeiture clause therein, where agreements con tained in the lease as to the use of the premises are broken by the lessee, and this is so whether the failure to comply with the covenant was due to inability or to mere neglect, or although the use for which the premises were leased is prevented by subsequent legislation, or although the unauthorized use of the premises is by the lessee’s servants in the course of their employment, notwithstanding such use is without his knowledge and consent and in violation of his orders.”
The case of Perrault v. Griffin, 27. Rev. Leg. N. S. (Que.) 24, is the only one cited in support thereof. Perhaps the reasonableness of the rule has never been questioned. It appears to us that the keeping of 'a dog in an apartment house, in violation of an express written agreement, is such that, if persisted in, entitles the landlord to repossess himself of the premises.
Judgment of the trial court is reversed, with costs to plaintiff, and the case is remanded to the trial court for direction to enter judgment for plaintiff.
Starr, C. J., and North, Btjshnell, Sharpe, Boyles, and Reid, JJ., concurred. The late Justice Wiest took no part in the decision of this case. | [
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Wiest, J.
This is an action on an accident insurance policy. We quote the following from the stipulated facts:
“Oh July 6, 1932, about the hour of six p. m. he (the insured) was the owner, and was operating, a Chevrolet coupe with a light trailer attached, going in a southerly direction on the Clio road in Genesee county, about a half mile north of Pearson road. He was alone at the time, having delivered some lumber to a location on the Clio road, and was returning to his home in Flint. As he was proceeding along the highway some papers which he had in his car slipped to the floor, and he thought one of them had blown out, and he put his head out of the left side window of the car and looked back up the road; while thus momentarily looking back, his car veered off to the right side of the highway and ran into a shallow ditch, striking a Consumers Power Company pole, carrying high-tension wires, which pole was' about six feet off the highway. The impact broke the pole completely off, one of the wires broke and fell with one end laying over the car and/or trailer, and the other end on the ground in the grass, under the car. The right front end of the car struck the'pole. After the collision the car was completely off the pavement about a foot from the edge.
“Deceased (the insured) got out of the left door of the car. About five people had gathered at the scene, saw the deceased walk across the pavement and stand around a few minutes talking to some of the bystanders and telling them about the papers slipping off the seat, thinking one had blown out, and his looking back outside to see, and then his car going off the road. He appeared shocked and pale to most of the bystanders, and all right to others.
“The end of the wire on the ground apparently set the grass on fire right under the motor. Deceased started toward the car and some of the bystanders shouted a warning not to touch the car, but he continued, reached and took hold of the door handle as he approached the car, and was immediately electrocuted. He fell over on his car between the left front fender and the hood and then slipped down to the ground, from where he was removed by some of the bystanders. The whole transaction, from the time of impact until his electrocution only consumed about five minutes of time. ’ ’
The policy of insurance contained the following provision:
“The Michigan Mutual Liability Company * * * does hereby insure the insured subject to all conditions and limitations hereinafter contained, against death, dismemberment, loss of sight or disability resulting within 30 days from date of accident directly by and independently of all other, causes from bodily injuries sustained through external, violent and accidental means caused while the insured is riding in, either as driver or passenger, or by being accidently thrown from the automobile hereinbefore described.”
-The question presented is whether the insured met his death from bodily injuries sustained while he was riding in the automobile.
The language of the policy is not ambiguous; calls for no construction and, must, therefore, be considered in its plain and easily understood sense. Kingsley v. American Central Life Ins. Co., 259 Mich. 53. The insured was not riding in the automobile when he was electrocuted. See Eynon v. Continental Life Ins. Co. of Missouri, 252 Mich. 279.
The judgment is reversed, without a new trial, and with'costs to defendant.
Nelson Sharpe, C. J., and Potter, North, Fead, Butzel, and Edward M. Sharpe, JJ., concurred. Bushnell, J., did not sit. | [
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Sharpe, J.
Defendant reviews his conviction on a charge of violating the prohibition act on exceptions before sentence. On June 20, 1925, the sheriff of Hillsdale county entered the place of business of defendant in the city of Hillsdale, in which he served soft drinks and lunches. He testified that a number of men were standing at the bar with glasses in their hands, and appeared to be drinking; that he worked his way to the south end of the bar and saw two glass jugs, one empty, the other full, on a projection behind it, so that the tops of the jugs were about level with the top of the bar; that he said to defendant, “George, you got something here that has got a kick in it?” and defendant answered, “You - right I have * * * it will make a man drunk if it ever gets inside of you,” and that he asked him if he wanted a drink. Defendant took hold of one of the jugs to pour out some, and the sheriff said: “No, George, I don’t care about drinking any, I’ll take the whole jug.”
On analysis, the liquid in the jug contained 81/2 per cent, alcohol. Defendant’s counsel moved to suppress the use of the liquor as evidence, for the reasons, first, that possession of it was illegally obtained by the sheriff, and, second, that the sheriff did not make out and deliver a written report and inventory of the liquor taken and the receptacle in which it was contained, nor did he deliver such liquor or receptacle to the commissioner of public safety, as required by section 31 of Act No. 338, Pub. Acts 1917, as amended by Act No. 382, Pub. Acts 1925.
A drink of the liquor was offered to the sheriff by the defendant, who assured him that it was intoxicating. The defendant was violating the law in a public place, and it was clearly the duty of the sheriff to take possession of the liquor, have it analyzed, and, if found to be intoxicating, as he was assured by the defendant that it was, to make complaint and cause his arrest. He in no way violated the constitutional rights of the defendant.
Act No. 382 contains the provisions stated in defendant’s motion. The neglect, of the sheriff to comply therewith, while it might render him liable to the penalty provided therein, in no way affected the admissibility of the liquor as evidence. Had it been sent to the commissioner, it might have been procured for that purpose. The only question before the court was its identification as the liquor secured at defendant’s place of business. This was clearly established'.. The motion to suppress was properly overruled.
The complaint, warrant and information charged! the violation as a second offense. The prosecution offered in evidence the journal entry of the circuit court for Hillsdale county, which showed that the defendant had been therein convicted of a violation of the prohibition law on March 10, 1925. It appeared that the defendant had removed this case to the Supreme Court on exceptions before sentence and it was then undecided. It was .later affirmed. 233 Mich. 284. It was urged that until affirmed on review it could not be made the basis of a first conviction. The holding of this court in People v.. Adams, 95 Mich. 541, is adverse to this contention. It was cited with approval in People v. Farrell, 146 Mich. 264, 290.
The other errors assigned have been examined, but in our opinion do¡ not merit discussion.
The exceptions are overruled and the trial court advised to proceed to sentence.
Bird, C. J., and Snow, Steere, Fellows, Wiest, Clark, and McDonald, JJ., concurred. | [
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Edward M. - Sharpe, J.
July 5, 1930, at about 2 a. m., the plaintiff, a young man about 22 years of age, was fishing on defendant’s railroad bridge when he was struck and severely injured by defendant’s train and thrown into the water below.
The bridge on which plaintiff was injured spans the west branch of the Ontonagon river about one mile east of Bergland, Michigan. About 700 or 800 feet northeast of the bridge is a dam, the water running over which makes much noise. Defendant’s regular eastbound passenger train No. 8, running from Duluth to Marquette, left Bergland at 2 a. m., July 5, 1930, on time and got to the bridge at 2:04 or 2:05 a. m. The track is straight and level for more than half a mile west of the bridge and for. two miles east of it. The locomotive was equipped with an electric headlight which' would illuminate the track ahead on a clear night for a distance of 700 to 900 feet. The train was proceeding slowly at about 25 miles an hour because of a fill being constructed just east of the bridge. At that speed the train could be stopped in about 300 feet. The automatic bell was set ringing and the whistle blown before the train reached the bridge on account of a highway crossing east of the bridge.
The bridge is about 175 feet long. No person could remain safely on the surface of the bridge while a train passed, but there are projecting caps or timbers 15 feet apart at the side of the bridge and below the level of the rails, large enough for a person to stand or sit on while a train passed. These caps were so used by trainmen and also by fishermen.
Plaintiff was sitting on the guard rail (a heavy plank across the end of the ties) on the north side of the bridge, facing north, and about in the middle of the bridge. The river at that point has a depth of about four feet. Plaintiff could swim. Prior to this time many people had used the bridge for fishing purposes although no one was ever known to fish from this bridge at night. The' engineer and fireman on defendant’s train testified that they saw no one on the bridge that night and did not know of the accident until months later.
Plaintiff claims that defendant’s enginemen were guilty of negligence in not discovering the peril of plaintiff and in not appreciating that plaintiff was ignorant of his danger and stopping the train before reaching him. Defendant claims that the bridge was constructed and maintained by it exclusively for its own purposes; that the plaintiff was guilty of contributory negligence and did not exercise due care and caution for his own safety in placing himself and remaining in a position of such obvious danger to the time of the collision; that it did not know of or even suspect the presence of plaintiff on the bridge; and denies that in the exercise of due care it could have discovered plaintiff’s position of peril in time to have avoided colliding with him. Defendant also claims that plaintiff was a trespasser and that it owed him no duty to maintain a look-out for his safety.
The case was tried before a jury and a verdict found for plaintiff in the sum of $2,500. Defendant appeals.
Defendant complains of the following portions of the court’s charge to the jury':
“So that even though the plaintiff was negligent in going upon this bridge and there engaging in fishing, if the defendant’s engine crew discovered him fishing there, and if the plaintiff was unaware of the approach of the train and the engine crew knew, or in the exercise of ordinary care could and should have known, that plaintiff was unaware of the approach of the train, in sufficient time before the accident to have enabled the engine crew by the exercise of ordinary care and the use of the means at hand, to have avoided the injury, then it would be the duty of the engine crew to have done so, and the failure on their part to have done so would be sufficient basis for a recovery on the part of the plaintiff, even though he himself negligently placed himself in this position of peril. * * *
“In order to entitle plaintiff to recover in this case he must show by a preponderance of the evidence each and all of these four propositions: First, that the defendant’s engine crew saw, or, in the exercise of ordinary care, could and should have seen him on the bridge; second, that plaintiff was actually unaware of the approach of the train which struck him until it was too late for him to escape being hit by tbe train, by the exercise of ordinary care on his part; third, that the defendant’s train crew knew, or in the exercise of ordinary care could and should have known, of plaintiff’s ignorance of the approach of the train; and fourth, that the defendant’s engine crew discovered, or in the exercise of ordinary care, could and should have discovered plaintiff’s presence on the bridge, and plaintiff’s ignorance of the approach of the train, in sufficient time, before the plaintiff was struck by the train, so that by the exercise of ordinary care and the use of the means at hand, the engine crew could have avoided plaintiff’s injury by giving him warning of the train’s approach, slackened the speed of the train, or stopped the train.
“If the plaintiff has proven each and every one of these propositions by a preponderance of the evidence, then he is entitled to recover, otherwise your verdict should be for the defendant. * * *
“Whether or not, if the train crew saw or should have seen plaintiff on the bridge and plaintiff was unaware of the approach of the train as claimed by him, the engine crew could and should have discovered his want of knowledge of the approach of the train in sufficient time to have avoided his injury in the manner claimed by plaintiff, is a question of fact for you to determine from all of the evidence in the case.”
That the plaintiff was guilty of contributory negligence 'is evidenced from his own testimony. The plaintiff testified:
“I knew perfectly well when I went on to that bridge that time that it was a place of danger and I knew that if a train came along when I was about the middle or center of that bridge that I was in serious danger of being hurt. On this occasion I was in about the center of the bridge and I did not know that a train was coming. I didn’t look to see ■whether a train was coming. I just sat there on the guard rail fishing at the time. I did not have any blanket or shawl over my head at the time, so that if I had turned to the right or left and looked up or down the track I would have seen the train if it was coming. It wasn’t foggy that night, there was no fog at all. It was a clear and starlight night; I don’t remember whether the moon was shining. I had been there only a few minutes fishing when this accident occurred and during’ those few minutes I paid no attention to anything except fishing. I was looking out, watching my line and watching the water and my mind was intent on the fishing, I was anxious to catch some fish. I did not catch any fish in those few minutes. I was waiting anxiously for the fish to bite. My mind was on the fishing but I tried to take care of the possibility of a train coming too. During that 15 minutes I don’t remember if I looked up or down the track at all.”
Plaintiff was a trespasser at the place and time he was injured and there is no evidence that his peril was discovered by the operators of the train. In such cases the railroad has no duty to maintain a look-out for or warn trespassers on its tracks. Trudell v. Railway Co., 126 Mich. 73 (53 L. R. A. 271); Winnie v. Railway Co., 160 Mich. 334; Newell v. Railway Co., 187 Mich. 697; Risbridger v. Railroad Co., 188 Mich. 672; Stankiewicz v. Railroad Co., 263 Mich. 267.
Where there is no duty to see or maintain a watch for plaintiff, the doctrine of last clear chance does not apply unless plaintiff’s peril is actually discovered. Newell v. Railway Co., supra.
Judgment reversed without a new trial. Costs to defendant.
Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, Butzel, and Bushnell, JJ., concurred. | [
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Butzel, J.
The charter of the city of Saginaw (section 55), provides that no contract for expenditures exceeding $1,000 shall be awarded without competitive bidding. On May 17, 1933, the city advertised for sealed proposals for water meters of different sizes, and executed and filed certain specifications applicable to such meters. The Badger Meter Manufacturing Company, a Wisconsin corporation, defendant herein, and the Pittsburgh Equitable Meter Company were among those submitting bids. On July 20, 1933, the council adopted a resolution wherein it was resolved that the bid of the Badger Meter Manufacturing Company for %- inch meters, and those of the Pittsburgh Equitable Meter Company on all other sizes of meters advertised for, were the lowest and best bids, and that the contracts be awarded accordingly to the two com panies. Five days later the council at a regular meeting resolved to reconsider its action, and subsequently the entire contract for all the meters was awarded to the Badger Meter Manufacturing Company.
In the notice inviting sealed proposals appear the following pertinent provisions:
“Each bidder shall furnish full description, specifications and detailed information for each size and kind of water meter bid upon. Bids may be made on all types of water meters; alternative bids for U. S. G-. graphite discs or pistons.
“In addition to quoting prices on said meters, each bidder shall submit a price list of parts specifying the price at which the city may purchase parts of meters. Bidders shall furnish with their bids such guaranty or guaranties of their respective meters and parts as they are willing and authorized to make. In addition to the foregoing, bidders may furnish such other information and facts as they desire relative to maintenance cost, accuracy, cost of parts, life of meter and other like information. Prices for each size and kind of meter shall be made on^ unit basis including f. o. b. Saginaw, Michigan.
“The city shall have and expressly reserves the right to accept any part or all of any bid; to award contract to two or more bidders for such quantities and/or sizes as the city shall determine; to reject any or all bids.”
The specifications contain the following clauses:
“The manufacturer: Shall bid on their best grade of meter and bids on undersized, substitute or so-called competitive meters will not be considered. * * #
“ Guarantee: Meters must be guaranteed against defects in materials and workmanship for a period of three years from date of shipment. Parts to replace those in which a defect may develop within such period, will be supplied without charge, piece for piece, upon the return of such defective parts to the manufacturer thereof, or upon proper proof of such defect; or bidder may make such guaranty he desires to offer. * * *
“Awarding of contract: The city reserves the right to accept or reject any bid or to award the contract for such meter or meters as may be regarded as best suited to local service conditions. The city further reserves the* right to increase the quantity of meters named in these specifications, to a number sufficient to meet the requirements of the city at such time or times as additional meters are required, and funds for the purchase therefor are available, or to accept proposals in entirety or parts thereof. ’ ’
The bid of the Badger Meter Manufacturing Company contained two separate and distinct proposals, upon two models of meters of the same type and measurements, one higher-priced than the other. The bid contained a guaranty against defects in material and workmanship for a period of only one year. The proposal of the Pittsburgh Equitable Meter Company was for but one model of meter of the type specified. The prices submitted by the Pittsburgh company were identical with those offered by the Badger Company on its lower-priced model, with the exception of one size, as to which the bid of the Badger Company was slightly lower. Plaintiffs Robinson et al., as taxpayers of the city of Saginaw, brought suit praying for cancellation of the contract awarded to the Badger Meter Company, and for an injunction restraining the performance thereof. Plaintiffs claim that the proposal of the Badger Company did not conform to the terms set forth by the city in its notice asking for bids and in its specifications, and that the acceptance of snch proposal was illegal for that reason. The trial judge granted a motion to dismiss.plaintiffs’ bill of complaint, from which order plaintiffs have appealed.
Appellants lay great stress upon the fact that the specifications contained a clause providing that meters must be guaranteed for a period of three years from date of shipment. It is claimed that the Badger Company’s bid was therefore invalid, because it limited its guaranty to a period of one year. However, the section dealing with the period of guaranty ends as follows:
‘ ‘ Or bidder may make such guaranty as he desires to offer.”
Furthermore, the notice inviting the sealed proposals contained a provision that bidders “shall furnish with their bid such guaranty or guaranties of their respective meters and parts as they are willing and authorized to make.” We believe that in view of this other language permitting bidders to make such guaranties as they desired to offer, the word “must,” as used in the clause stressed by appellants, should be construed as merely directory rather than mandatory or imperative. The bid therefore did conform substantially and in material respects with the notice or advertisement for bids, and with the specifications, although it contained only a one-year guarantee. Andrews v. City of Detroit, 233 Mich. 79; Pascoe v. Barlum, 247 Mich. 343 (65 A. L. R. 833).
Appellants contend that if the specifications did permit bidders to submit any guaranty they desired, there was then a lack of a definite, concise basis for competition among bidders, in violation of the provision of the charter requiring competitive bidding. There is no question that such necessary information must be placed within the reach of bidders as to enable them to bid intelligently and to make it possible for the city to know whose bid is lowest. City of Detroit v. Wayne Circuit Judge, 79 Mich. 384. The specifications and notice together did give such information. They described the types of meters to be bid upon, the measurements, etc. Only the length of the period of guaranty was left to the discretion of the bidders. This did not constitute such a lack of definiteness so as not to inform bidders of the conditions they were supposed to meet, and there was no such uncertainty as to make the bids invalid. City of Detroit v. Wayne Circuit Judge, supra; Attorney General, ex rel. Cook, v. City of Detroit, 26 Mich. 263. There was, therefore, no impropriety in the council’s acceptance of the bid here attacked, even though it contained only a one-year guaranty.
It is further claimed that the successful bid was invalid because it contained two separate proposals on the same class- of meters, both being for meters of the same measurements, but at different prices; that only one of such meters, the higher-priced one, could be the best grade, and that the proposal consequently did not comply with the clause in the specifications providing:
‘ ‘ The manufacturer: Shall bid on their best grade of meter and bids on undersized, substitute or so-called competitive meters will not be considered.”
The notice hereinbefore quoted, inviting sealed proposals, provided that each bidder should furnish full description, specifications and detailed informa tion for each size and kind of water meter bid upon, and that bids might be made on all types of water meters. The specifications provided that the city reserved the right to accept or reject any bid or to award the contract for such meter or meters as might be regarded as best suited to local service conditions.
The words “best grade” do not necessarily mean the highest-priced, but rather denote a class of meters of the highest quality. One model of water meter might be best under certain conditions, while a more simple and less expensive kind might be best for other conditions. The distinction is pointed out in Whittemore v. Weiss, 33 Mich. 348. The problem 'of measuring the water used in one locality might necessitate a very expensive water meter, which would be the best to meet that particular local problem, while in another locality a cheaper meter might be the best. In Attorney General, ex rel. Cook, v. City of Detroit, supra, in which an attack was made on specifications inviting bids on numerous different kinds of pavement, the court stated:
“The greater the number of such pavements, the larger is the opening for competition.”
The lower court granted a motion to dismiss, and we must, therefore, assume, for the purposes of this appeal, that all allegations well pleaded in the bill are true, including plaintiffs’ allegations that the meters accepted were not best-grade meters. It appears however that the local council, in the proper exercise of its discretion, determined that such meters were best-grade meters, and not undersized, substitute or so-called competitive meters. There is absolutely no charge of either lack of good faith, fraud, collusion, or violation of any trust. In Leavy v. City of Jackson, 247 Mich. 447, as well as in Berghage v. City of Grand Rapids, 261 Mich. 176, the following statement from 3 McQuillin on Municipal Corporations (2d Ed.), § 1340, was expressly approved of and followed by the court :
“The exercise of discretion to accept or reject bids will only be controlled by the courts when necessary to prevent fraud, injustice or the violation of a trust. The court will indulge the presumption that the authorities acted in good faith in awarding the contract.”
See, also, Putnam v. City of Grand Rapids, 58 Mich. 416, and City of Detroit v. Wayne Circuit Judge, supra. The determination of the council that the bidder complied with the conditions fairly set forth in the advertisement and specifications will not be disturbed by the court under the circumstances.
It is unnecessary to discuss other questions raised solely by appellees.
The decree of the trial court is affirmed, with costs to defendants.
Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, Bushnell, and Edward M. Sharpe, JJ., concurred. | [
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Butzel, J.
Plaintiff, as administrator of the estate of his deceased wife, brought this action against John Schinderle, a retail dealer in meats and gro ceries in the city of Iron Mountain, and Cudahy Brothers Company, a Wisconsin corporation. It is claimed that Mrs. Cheli contracted trichinosis as a result of the ingestion of uncooked sausage prepared from raw pork containing trichinae; and that the meat was purchased from Schinderle, who in turn obtained it from Cudahy Brothers. The declaration contained two counts, one alleging that Cudahy Brothers negligently failed to use due care in the preparation of the meat. The other alleged the breach of an implied warranty that the meat was reasonably fit and proper for use as food, etc.
The defendant Schinderle was relieved from liability by a directed verdict, from which no appeal is taken.
Defendant Cudahy company, against whom a verdict was rendered, claims that the verdict of the jury was based on conjecture and speculation as to the origin of the meat involved, as well as the origin of the trichinae. It further contends that, if it sold the meat in question, it was not derelict in the performance of any legal duty. Defendant claims that there is no known practical method by which the presence of trichinae can be detected in raw pork and that, therefore, it cannot be held responsible for infection and death caused by bacteria absorbed into the body as a result of eating raw meat.
In 260 Mich. 496, we held the service of process in the instant case to be valid.
Appellant’s contention that the verdict of the jury was based upon conjecture and speculation as to the source of the meat is not justified by the record. The testimony shows that on January 12, 1931, the deceased ordered about 30 pounds of fresh pork butts at Schinderle’s store. Schinderle informed her that he had insufficient on hand at that moment, but filled the order on the afternoon of the same day. It is conceded that the retailer purchased pork butts only from Armour & Company and Cudahy Brothers. It is shown by the proofs that during the month of January, Armour did not fill any orders from the Iron Mountain branch warehouses. Its record of deliveries from St. Paul show shipments arriving only January 8th, 15th and 17th. In view of the facts set out, therefore, the jury was justified in concluding the Cudahy meat was used to fill Mrs. Cheli’s order on the afternoon of the 12th. This included additional evidence as to the methods of wrapping and packing employed by the two companies, as well as the presence of a Cudahy label on the box in which the butts were packed. The ques1 tion was left to the determination of the jury and we see no reason to disturb its findings in this respect.
The testimony shows that there is no known, practicable or feasible method of determining whether hogs are infected with trichinae. The bacteria can be detected only by microscopic inspection of the entire carcass of the animal, although the organism is generally found in the muscles. Until 1906, it was the practice of the government to make such examinations, but this practice was finally discontinued because it was found to be ineffective. The only known treatments generally effective in killing trichinae are (1) freezing for 20 days at a temperature not higher than five degrees Fahrenheit, (2) raising the temperature of the meat to 170 degrees momentarily, or (3) a prescribed curing process. All of these processes, although effective, remove from the meat in a degree the quality of freshness demanded by the public. None of these methods were used by the appellant in its preparation of fresh pork, but the evidence clearly shows that all the ordinary, usual and reasonable precautions taken by tbe meat packing industry were observed in the instant case.
Act No. 193, Pub. Acts 1895, as amended, 1 Comp. Laws 1929, §§ 5425-5442, prohibits the sale of adulterated foods, and 1 Comp. Laws 1929, § 5427, in eludes diseased or tainted meats within this classification. Appellee contends that a violation of this statute is negligence per se. To give the statute such force in this case would in effect impose upon the manufacturer the liability of an insurer, regardless of the unusual nature of the use to which its product is put, if the testimony of Dr. A. Behnke is to be taken as true. The witness, a graduate veterinarian, has served in the bureau of animal industry of the United States department of agriculture for over 35 years. He testified that:
“The microscopic examination of hog carcasses for trichina with a microscope is not effective. That is the fact that one may find trichina in the muscles that are usually so infected is no guaranty that the rest of the carcass is free from trichina. And it is impracticable to make a complete microscopic inspection for trichina of the entire carcass. * * *
“There is no way of detecting trichina or making an inspection so that a statement can be made that the entire carcass is free from trichina.”
While this court has held that the statutes impose criminal liability upon those selling adulterated foods, regardless of the absence of proof of criminal intent or guilty knowledge (People v. Snowberger, 113 Mich. 86 [67 Am. St. Rep. 449]), we cannot hold that the legislature intended to impose upon the producer the absolute civil responsibility of an insurer in cases where every reasonable means designed to guarantee the safety of food for normal use has been employed.
The death of the deceased in the instant case resulted from the eating of raw pork, infected with trichinas. It seems well established by the evidence that the danger to the public is reduced to a minimum if the meat is thoroughly cooked. The ultimate consumer, however, demands that fresh pork be offered for sale. If it has been completely sterilized by any of the means hereinbefore indicated, the meat loses this freshness.
There is no testimony revealing any negligence on the part of defendant. What breach of duty is chargeable to it? The fresh pork was prepared by the methods adopted by other packers engaged in similar businesses. The methods of preparation and inspection measured up to the standard demanded by the Federal government.
“No one is held liable to a higher degree of care than the average in the trade or business in which he is engaged.” Ketterer v. Armour & Co., 160 C. C. A. 111, 121 (247 Fed. 921, 931, L. R. A. 1918 D, 798).
Although it is our opinion that defendant was free from negligence in this case, we do not wish to be construed as departing from the principle that a manufacturer or packer of foodstuffs is liable to the ultimate consumer for injuries caused by his negligence. This is well settled in the law. Hertzler v. Manshum, 228 Mich. 416; Tate v. Mauldin, 157 S. C. 392 (154 S. E. 431).
Although the defendant cannot be held to respond in damages for negligence, may liability be imposed for breach of an implied warranty? The doctrine of implied warranty, while often confused with that of negligence, rests upon another principle of law. The two theories are often asserted in the sanie action and this has at times led to a confusion of reasoning. The propriety of including* both theories in separate counts in the same action was clearly pointed out by Justice Wiest in Hertzler v. Manshum, supra. That case also held that a manufacturer who prepared foodstuffs destined to be sold to and consumed by the public is bound by an implied warranty that its product is free from foreign, poisonous or deleterious substances. Implied warranties of quality are limited by the uniform sales act. Section 15 thereof, being 2 Comp. Laws 1929, § 9454, reads:
“Subject to the provisions of this act and of any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract to sell or a sale, except as follows:
“(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are to be required, and it appears that the buyer relies on the seller’s skill or judgment, whether he be the grower or manufacturer or not, there is an implied warranty that the goods shall be reasonably fit for such purpose.”
Tested by this language, the record does not disclose that the buyer expressly or by implication made known to the seller that the pork was required for the purpose of making* raw sausage, to be eaten in an uncooked state. Nor is there any showing that an implied warranty or condition as to the quality or fitness of raw pork as food in an uncooked condition is annexed to the sale by the usage of trade. See sub-section 5 of the same statute (3 Comp. Laws 1929, § 9454). Comparatively speaking, only an infinitesimal amount of the pork sold is eaten raw. It seems to follow logically that it is unfair to impose the liability of an insurer upon the meat packer through the implication of a warranty that pork is fit for human consumption in a raw state. This is especially true in view of the fact that the danger of infection can be reduced almost to the vanishing point by ordinary cooking methods. Fresh pork is not ordinarily intended to be eaten raw. The warranty should be applied only to food used in the usual, rather than in the unusual and improper manner.
We are satisfied that defendant cannot be held liable either for negligence or breach of an implied warranty. It is unnecessary to discuss other alleged errors.
The verdict of the jury is reversed without new trial, with costs to appellant.
. Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, and Edward M. Sharpe, JJ., concurred. Bushnell, J., did not sit. | [
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Edward M. Sharpe, J.
November 22, 1923, plaintiff, while in the employ of defendant company at Hermansville, Michigan, cut the palm of his hand on a rusty nail. He made a report of the injury to the company foreman and about eight days later he went to the company doctor, who advised him to go to the hospital. He remained in the hospital in Escanaba 57 days under the care of Dr. Kitchen. An infection set in and the middle fingers of the left hand became limited in motion and were drawn in towards the palm of the hand. Later a limitation of the middle fingers of the right hand became noticeable, thereby restricting the gripping power of that hand. After plaintiff’s discharge from the hospital, he returned to Hermansville and reported to the company doctor, who advised him to return to work. He worked one day and the sore on his hand opened up and he was home for two months during which time the company doctor looked after him. He then returned to work for the company cleaning bricks, but was somewhat limited to the use of his right hand in such work. He later worked for the village of Kings-ford digging a sewer, but claims that he could not have done this work if he had not been aided by two of his fellow countrymen.
The record discloses that the last time plaintiff did any work for defendant company was in February, 1926. In October, 1926, plaintiff applied to defendant company for work but did not secure any. He then went to Gladstone, Michigan, where he did odd jobs for his countrymen, enough to earn his board. At the time of the injury plaintiff was earning $19.50 per week.
December 20, JL924, plaintiff filed a claim for compensation. This matter was heard and on February 3, 1925, plaintiff was granted an award in the sum of $11.70 per week for a period of six weeks and two days from December 2,1924. Plaintiff gave defendant a “final settlement” receipt for the amount of the award, $74.10, which was dated February 5,1925, and was filed with the department of labor and industry but never officially approved. Nothing further seems to have been done until March 2, 1932, when plaintiff filed a petition for further compensation. Plaintiff alleges “that he has been disabled from performing useful labor excepting at odd times when the respondent company furnished him with a job; that he has been disabled more or less since the date of his accident, December 2, 1924 [November 22, 1923?]; that he is now and has been for some time past totally disabled.”
Defendant answered, denying liability on the grounds that “ (1) the plaintiff’s claim has been adjudicated; (2) the plaintiff is suffering no disability as a result of said injury; (3) the plaintiff is not suffering further disability as a result of said injury; (4) plaintiff voluntarily signed a settlement receipt and thereby terminated defendant’s liability; (5) defendant denies that plaintiff has suffered any disability since February 2, 1925.” On the hearing defendant was granted permission to amend its answer by pleading -the general statute of limitations and the statute of limitations of the compensation act in bar of plaintiff’s claim.
Hearings were held on June 14, 1932, and August 1, 1932, by the deputy commissioner and plaintiff was awarded compensation in the sum of $2.92 per week during the period of partial disability from March 1, 1930. The matter was appealed to the department of labor and industry and on February 16, 1933, plaintiff was awarded compensation at the. rate of $5.85 per week from November 1, 1926, until facts and circumstances warrant a change, not to exceed 500 weeks from date of injury.
From this order defendant appeals.
On an appeal in the nature of certiorari from an award of the department of labor and industry we must affirm the award if there is any competent testimony supporting it. King v. Peninsular Portland Cement Co., 216 Mich. 335; Martilla v. Quincy Mining Co., 221 Mich. 525 (30 A. L. R. 1249); Kibbey v. L. O. Gordon Manfg. Co., 260 Mich. 531; Bjorkstrand v. Klagstad, 262 Mich. 186.
The commission’s award was based on a 50 per cent, disability and calculated according to the statute in effect at the time of the injury; that is, 60 per cent, of the difference between what plaintiff was able to earn at the time of the injury and what he was able to earn after the injury. Act No. 64, Pub. Acts 1919, § 10. Payments were made to begin from the date defendant company refused plaintiff work.
There is evidence in the record to support these findings of the commission. Although the testimony of physicians produced by defendant was largely contradictory to that of plaintiff’s witnesses and tended to show that plaintiff’s disability was not caused from the injury but from a chronic arthritis deformans largely induced by pyorrhea, there is evidence from which the commission could find that plaintiff had suffered a 50 per cent, disability as a result of the injury.
Dr. S. C. Stern, witness for the plaintiff, testified in answer to a hypothetical question based on the testimony in the case:
“The likelihood is, even though this man had a tendency to develop a rheumatic condition, that this one factor of the infection seemed to have been a crucial point. The condition is chronic. It takes a short period of time to show itself up as rheumatic condition. It requires a certain amount of toxin or infection circulating in the system to produce just that condition.
“Q. Would you say that the injury, the accident of running the rusty nail in the left hand, was the cause of the present physical condition?
“A. It would certainly appear that it was a crucial point. The infection present at that time had a marked influence in bringing his present condition on.
“Q. Would you say it was the cause of his present condition?
“A. It is conceivable that it was.
“Q. What percentage of earning impairment has the plaintiff in your opinion?
“A. His left hand is certainly impaired so that he could barely grip. Eight hand impaired to some extent. I would imagine that certainly the. man couldn’t do over 50 per cent, of his work anyway.”
Dr. A. L. Swinton, another physician called by plaintiff, testified to a question based on a hypothetical statement of the facts in the case:
“Q. With that testimony, doctor, and the examination that you personally made of him, what would you say was the cause of the present physical condition of the plaintiff?
“A. Most probable cause, outstanding cause, was the infection of the palm of the left hand.
“Q. Do you attribute the condition in the right hand to the infection that he received in the left hand?
“A. Ido.
“Q. Will you tell us-just how you come to that conclusion?
“A. These inflammatory conditions similar to the one this man is suffering with are due to infections, irritations, the system becomes saturated with the poison from any focus, no matter how remote, sometimes it involves the knees, the feet, sometimes the neck, or some other place. This infection apparently was of a serious and prolonged nature, his resistance was unable to cope with it, he remained in a condition of lowered vitality apparently for a considerable time so that other factors, such as the condition of his teeth that might gradually have developed, become a factor because of his lowered vitality from this injury. The infection traveling through his system inflamed the palm of his right hand causing a similar condition not so extensive because you haven’t the wound and the scar and adhesions, but you have the same toxin, the same poison, doing the same thing, bringing about the same rheumatic condition. ’ ’
The same witness also testified:
“Q. What degree of loss in his earning capacity has he suffered?
“A. I would consider the man totally disabled.
“Q. For how long a period back would he have been totally disabled?
“A. My opinion wouldn’t be worth very much. I don’t know how rapidly this contracture has been going on. Partial disability since the time he left the hospital, ever since the contracture started, because he couldn’t use his left hand and hasn’t been normal since the injury.”
The commission may rely upon the testimony of plaintiff and his witnesses in determining the duration and cause of the disability. Johnson v. Pearson, 264 Mich. 319. It is not exclusively bound by medical testimony to the contrary. Austin v. Howard A. Davidson, Inc., 246 Mich. 599.
Counsel for defendant next contend that plaintiff’s claim is barred by the statute of limitations (3 Comp. Laws 1929, § 13976). The limitation within the compensation act, 2 Comp. Laws 1929, § 8431, does not apply, as it relates only to notice of the injury and the making of the first claim. Plaintiff’s disability was continuous and so would not come within the two-year limitation. The statute does not provide any limitation for the making of claims for further compensation under 2 Comp. Laws 1929, § 8453. These may be made whenever there has been a change in the physical condition of the plaintiff. Harris v. Castile Mining Co., 222 Mich. 709; Klum v. Lutes-Sinclair Co., 236 Mich. 100; Austin v. Howard A. Davidson, Inc., supra; Kibbey v. L. O. Gordon Manfg. Co., supra. The only restriction upon such claims is that compensation may not be granted for a period greater than 500 weeks after the injury.
The general statute of limitations does not apply to the bringing of claims under the compensation act before the department of labor and industry but only to the taking of judgment upon the awards of that department. Buzzn v. Muncey Cartage Co., 248 Mich. 64; Gallup v. Western Board & Paper Co., 252 Mich. 68.
The award is affirmed, with costs to plaintiff.
Nelson Sharpe, C. J., and Potter, North, Pead, Wiest, and Butzel, JJ., concurred. Bushnell, J., did not sit. | [
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Boyles, J.
These consolidated cases involve the construction of an amendment to the city charter of Dearborn adopted in 1935, providing for a civil service commission; a new city charter effective January 6, 1943, re-creating the civil service commission and defining the status of officers and employees holding positions when this charter took effect; and the action of the defendants in refusing plaintiffs employment by the city. The circuit court for Wayne county granted writs of mandamus directing defendants to install plaintiffs in the position of assistant superintendents of weights and measures for the defendant city. Upon leave granted, defendants prosecute appeal in the nature of certiorari from the orders of the circuit court granting the writs. The facts are not in dispute.
In 1935 the city of Dearborn amended section 34 of chapter 6 of its then-existing charter to provide for a civil service commission to govern and control the appointment of employees of the city of Dear-horn. This charter remained in full force and effect until a new charter covering civil service, among other things, became effective January 6, 1943. On December 29, 1942, the city council adopted ordinance 216, creating a department of licenses, weights and measures, and two positions of assistant superintendents of weights and measures. Statutory authority for this ordinance is found in 1 Comp. Laws 1929, § 5538 (Stat. Ann. §12.1076), which provides in part:
“Any incorporated city in this State may in its discretion appoint a city sealer of weights and measures under this act. He shall be appointed by the mayor, by and with the advice and consent of the common council.”
On December 30, 1942, the mayor of the city of Dearborn appointed one Karmann and one Neary as. assistant superintendents of weights and measures. On the same day, the appointments were approved at a meeting of the common council, and Messrs. Karmann and Neary both took the oath of office and thereupon began to discharge the duties of the office.
. The city charter (1929) in effect at that time had a chapter inserted by amendment in 1935 providing for classified civil service for city employees, to be administered by a civil service commission. Section 5 provided:
“Classified City Service * * *
“The commission shall classify all positions and employment in the city of Dearborn to which appointments are made by any person or persons. The positions and employment so classified by the com-' mission shall constitute the classified service of the city of Dearborn, and no appointment to any such position or employment shall he made except under and according to the rules herein mentioned after the promulgation thereof. ’ ’
The charter then in effect did not include the positions now under consideration among those exempt from civil service. Section 15 provided.:
“Exemption from Civil Service
“The following officers and employees shall not be affected by the provisions of this chapter: officers elected by the people; officers and heads of departments appointed by the mayor; registrars, inspectors, supervisors, clerks and other assistants of elections; the mayor’s secretary and other office assistants; officers and members of the fire department and of the police department; persons employed as experts under provisions of section 33 of chapter 6 of the charter of the city of Dearborn.”
In that connection, defendants claim that the position of assistant superintendent of weights and measures is exempt from civil service under the above provision because the State law (1 Comp. Laws 1929, § 5510 [Stat. Ann. § 12.1077]) makes the deputy and the inspectors of the city superintendent of weights and measures ‘‘ special 'policemen. ’ ’ The mere fact that they were made “special policemen” by the State act, obviously for the purpose of enforcing the act, did not make these appointees “members of the * * * police department” of the city so as to exempt them from classified service under other provisions of the city charter.
Pursuant to the mandate in section 5 of that charter, the then-existing civil service commission made orders and rules classifying positions and employment in civil service, as follows:
“Bule 1. * * *
“c.. ‘Position’ means any office or place of employment in the classified service with duties and responsibilities calling for tbe full time or part time employment of one person in the performance and exercise thereof.
“d. ‘Permanent position’ means any position in the classified service which has required or which is likely to require the services of an incumbent without interruption for a period of more than six months. * * *
“Buie 6.
“Sec. 7. (a) Jurisdictional Classification. The unclassified service shall be comprised of officers elected by the people, officers and heads of departments appointed by the mayor, registrars, inspectors, supervisors, clerks and other assistants of elections, the mayor’s secretary and other office assistants. All such officers and employees shall be exempt from the provisions of these rules or any amendments thereto.
“Sec. 7. (b) Classified Service. The classified service shall be comprised of all positions, except those mentioned in section 7 (a), which are hereby declared subject to the provisions of these rules or any duly authorized amendments thereto.”
"We conclude from the foregoing charter provisions and the rules of the city civil service commission then in effect prior to the new charter, and in effect at the time that Messrs. Karmann and Neary were appointed to the position of assistant superintendents of the department of weights and measures, that this position was in the classified service.
On January 2, 1943, before the new charter went into effect, the city superintendent of the department of weights and measures requested the then-existing civil service commission to certify Karmann and Neary for the position of assistant superintendent in accordance with the terms and provisions of the original civil service law and the rules then in effect. Nothing was done on this .request by the civil service commission then in existence, but action was taken on January 8,1943, by the new civil service commission provided for in the new charter. This will be considered later.
Chapter 9, § 9.8, of the new charter, effective January 6,1943, defines unclassified and classified service as follows:
‘‘ The unclassified service shall comprise offices and positions held by:
“(a) Members of the city council and other elective city officers,
“(b) Corporation counsel and his chief assistant or deputy,
“(c) Elections inspectors,
“(d) Chief of the fire department,
“(e) Chief of police,
“(f) Directors and members of commissions and boards in charge of departments of the government of the city.
“The classified service shall include all other positions, now existing or hereafter created, and the provisions of this chapter shall apply thereto.”
It is apparent from the foregoing that the position of assistant superintendent of weights and measures is within the classified service under the new charter. ' It then becomes necessary to determine whether Karmann and Neary, occupying those positions in the classified service under the former charter and rules of the civil service commission, were “blanketed” into the classified service under the new charter by any of its provisions, or by rules of the new civil service commission in pursuance thereof. Chapter 9, § 9*.9, of the new charter defines the status of officers and employees holding positions when the charter took effect. It consists of three sentences, each covering a different situation, and they will be considered seriatim. The first situation covered is as follows:
“Except as provided in the preceding section, any person holding a position in the city classified service when this charter takes effect who shall have been properly certified by any civil service commission existing at the time of the adoption of this charter shall be retained without preliminary or performance tests and shall thereafter be subject in all respects to the provisions of this chapter.”
As has been pointed out, Messrs. Karmann and Neary, although holding a position in the classified service when the new charter took effect, had not been certified by the then civil service commission and therefore were not entitled to be retained without preliminary or performance tests, under the above provision in section 9.9.
The second situation covered by section 9.9' is as follows:
“Except as otherwise provided in this charter, any persons who are serving in positions which positions were previously in the classified service as determined by any civil service commission existing at the time of the adoption of this charter, and who were not properly certified by such commission as regular or permanent employees, shall be subject to the provisions of this charter and the rules adopted thereunder.”
Messrs. Karmann and Neary were serving in positions which positions were in the classified service under the old charter, as determined by the civil service commission existing at the adoption of the new charter. They had not been certified by that commission as regular or permanent employees, as we will shortly point out, and therefore they became subject to the provisions of the new charter and the rules adopted thereunder.
The third sentence of section 9.9 covers situations applying to “any other persons.” Messrs. Karmann and Neary, being persons within the provisions of the Second situation, cannot be classed as ‘ ‘ other persons” within the third or blanket provision. "We find it necessary to conclude that Karmann and Neary were not “blanketed” into permanent positions by the new charter without examination and certification by the new civil service commission.
On January 8, 1943, the new civil service commission met and decided that the set of rules and regulations of the former civil service commission be adopted for the time being, pending revision and final adoption. At the same meeting, the civil service commission certified Messrs. Karmann and Neary to the temporary position of assistant superintendent of weights and measures, pending results of competitive promotional examination to be advertised and held as soon as possible in accordance with the rules.
On January 9th, the secretary of the civil service commission notified the department of weights and measures that Messrs. Karmann and Neary were certified for appointment to the position of assistant superintendent temporarily, for 60 days, pending-examination. On the same day the superintendent of the department of weights and measures notified the civil service commission that Messrs. Karmann and Neary had been appointed temporarily. A civil service examination for the position' was held on February 27, 1943, and plaintiffs herein were passed with the two highest grades on the promotional employment list. Karmann and Neary took the examination, Neary failed to qualify for the appointment while Karmann stood fourth.
On March 1st, the secretary-examiner of the civil service commission issued a certificate that the two highest candidates from the promotional employment list were Messrs. Waller and Lawlor, plaintiffs herein, They presented themselves, with their ere dentials, to the superintendent of the department of weights and measures to take up their duties but were not accepted and not permitted to assume their duties. The matter was left to the corporation counsel of the city of Dearborn for an opinion and the corporation counsel held that Karmann and Neary were in the classified service at the time the new charter became effective and were therefore each entitled to the position of assistant superintendent and to the wages for that position. The civil service commission met and agreed to accept the opinion and to be governed thereby. The civil service commission then certified Karmann and Neary to the department of weights and measures for permanent appointment to the position of assistant superintendent. Plaintiffs thereupon filed the instant mandamus proceedings in circuit court, claiming that it was the clear legal duty of defendants under the civil service provisions of the city charter to certify and install them in the positions to which they had been originally certified by the civil service commission. The circuit court agreed, after hearing, and issued the writs.
The question narrows down to whether the city authorities had a discretionary power to continue Karmann and Neary in their positions; or, to state the converse, was it their clear' legal duty under mandatory civil service provisions of the old and new city charters to place plaintiffs in these two jobs? If the civil service commission had adhered to its original conclusion, to certify Karmann and Neary merely as temporary employees pending examination, and then had adhered to the subsequent certification of plaintiffs for the permanent employment following the examination, the issue between discretionary power and clear legal duty would not have arisen. The civil service commission, acting on tlie advice of the corporation counsel, subsequently reversed its original stand and certified Karmann and Neary for the permanent employment. The opinion of the corporation counsel that Karmann and Neary were entitled to retain the positions of assistant superintendents was no justification for the civil service commission to certify them for the permanent employment. The commission is bound by the plain mandate of the charter. The charter does not confer on the commission the discretion it assumed to exercise in ultimately certifying Karmann and Neary for permanent employment without' examination. That action on the part of the civil service commission was in contravention of the charter and of the rules of the civil service commission thereunder. Plaintiffs had received the highest standings on the examination and the charter required the civil service commission to certify them as the two candidates from the promotional and reemployment list. Under the provisions of the new charter it became mandatory that the petitioners be appointed to the position of assistant superintendents. There was no discretionary authority vested in either the civil service commission or the other city authorities to continue Messrs. Karmann and Neary for permanent employment in these jobs.
This is not a case where there is any reasonable doubt as to the clear legal duty of the civil service commission whereby it might use its discretion in certifying Karmann and Neary to permanent employment. For that reason, decisions relied on by defendants do not control. See Rupert v. Van Buren County Clerk, 290 Mich. 180; Solo v. City of Detroit, 303 Mich. 672. Nor is this a case where decision of the civil service commission was based on a consideration of disputed facts requiring exercise of judgment or discretion. Toan v. McGinn, 271 Mich. 28. We agree with the circuit judge that it was the clear legal duty of the civil.service commission to certify plaintiffs for the permanent employment. That being true, it must follow that the civil service commission was without any discretionary authority to subsequently certify Karmann and Neary for the permanent employment. Under the plain provisions -of the city charter, the superintendent of the department of weights and measures was without any right or authority to continue Karmann and Neary as assistant superintendents. As between Karmann and Neary, and the plaintiffs herein, and under the circumstances presented to us on this record, it was the clear legal duty of defendants herein to install plaintiffs in these positions.
The action of the lower court is affirmed, but without costs, a public question being involved.
North, C. J., and Starr, Wiest, Btttzel, Bushnell, Sharpe, and Reid, JJ., concurred. | [
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Bushnell, J.
Defendant George Parmelee, 62 years of age, lives on a farm near the SaginawGenesee county line, and has operated an oil and gasoline station for the last 8 or 10 years. He was convicted by a jury on a charge of f orging and uttering an ‘‘accountable receipt,” contrary to the provisions of sections 248 and 249 of the penal code, Act No. 328, Pub. Acts 1931 (Comp. Laws Supp. 1940, §§17115-248, 17115-249, Stat. Ann. §§28.445 and 28.446). Upon a motion for new trial the trial judge set aside the conviction of forgery, but permitted the conviction on the charge of uttering a forged “ accountable receipt” to stand. Parmelee appeals from a sentence placing him on probation for three years and the imposition of a fine of $150 and costs in the amount of $100.
John Turnwald, the complaining witness, who has been a farmer all his life, owns a farm located partly in Maple Grove, Saginaw county, and partly in Shiawassee county. He has had business dealings with Parmelee over a period of 15 years. On July 1, 1937, he sold 900 lbs. of beans at $6 per hundred to Parmelee, for which he received Parmelee’s check for $54. On November 15th of that year Parmelee wrote Turnwald a letter in which he claimed that Turnwald was indebted to him in the sum of $34.65. On December 2d he wrote him another letter in which he asserted that this money was due because of the agreement that was made at the time the beans were purchased and the drop in their market price between July 1st and October 1st. In March of 1938 Parmelee brought suit against Turnwald in justice court on the claimed agreement. While the justice court suit was pending, he again wrote Turnwald on May 14, 1938, in an attempt to force a settlement. In this letter Parmelee mentioned for the first time a receipt for $54 which he claimed Turnwald had given him. Parmelee neither obtained a settlement nor a verdict and appealed the case to the circuit court, where Turnwald again prevailed. Later, Parmelee was arrested and charged with forging and uttering an “accountable receipt.”
In the criminal trial the check was offered in evidence over Parmelee’s objection that:
“There is no dispute over this paper and it has no bearing on the case. It is not a proper exhibit, as it has no connection with any dispute in this case.”
The court overruled the objection on the ground that the check was part of the original transaction. The receipt which was received in evidence without objection reads:
“Date, July 1,1937. Mr. John Turnwald received of George Parmelee $54 to apply on beans. Price to be what I get for bal. of my beans between now and November 1. It is strictly understood there is to be no other agreements. 4# beans.
X John Tttrnwald and Geo. Parmelee. ’ ’
Turnwald testified that the first time he saw the receipt was in the justice court; that he did not know where it came from; and that he never signed it. He identified the check and said he indorsed it when he cashed it. Leroy Smith, a member of the Michigan State police force, who has pursued the investigation of handwriting since about 1930, testified, from comparisons made at the State police laboratory in 1938 of Turnwald’s indorsement on the check and the signature on the receipt, that, in his opinion, Turnwald’s signature on the receipt was a tracing of his signature on the back of the check. He amplified his testimony with the statement that the signatures were identical and “a perfect match” which could happen only once in “1,000,910,000,000 times.”
On appeal Parmelee charges error in the admission of the check “in evidence for the sole purpose of comparison of signature, on another exhibit.”
The rule established in Vinton v. Peck, 14 Mich. 287, was applied in People v. Parker, 67 Mich. 222 (11 Am. St. Rep. 578). In the Parker Case Mr. Justice Morse, speaking for a unanimous court, said it was error to compare the signature on an alleged forged deed with a signature on papers belonging in a probate file, none of which “were at all material or relevant to the question at issue and could possibly throw no light upon the case.” He stated the rule to be:
“Comparisons of this kind can only be made with such writings as are legally in evidence for some other purpose than that of being compared. ’ ’
As said by Judge Gillespie in Ms MicMgan Criminal Law & Procedure, § 1244, vol. 2:
“It was formerly the rule that when questions of handwriting were involved, writings claimed to have been made by the defendant must first be received in evidence for some other purpose than that of comparison, but it is now provided by statute, that whenever it shall be necessary to prove the signature of any person, any specimens of his handwriting or signature, admitted or proved to the satisfaction of the court to be genuine, may be introduced in evidence for the purpose of comparison, regardless of whether or not the paper on which such handwriting appears is one in evidence or connected with the case.”
The statutory rule is stated in 3 Comp. Laws 1929, § 17318 (Stat. Ann. § 28.1048), as follows:
“Whenever in the trial of any criminal case it shall be necessary or proper to prove the signature of any person, it shall be competent to introduce in evidence for the purpose of comparison, any specimen or specimens of the handwriting or signature of such person, admitted or proved to the satisfaction of the court to be genuine, whether or not the paper on which such handwriting or signature appears is one in evidence or connected with the case or not.”
The check in question was properly admitted in evidence.
The information sufficiently charges a violation of the statutes which make it a felony to falsely make, alter, forge, et cetera, and utter any “accountable receipt.” Sections 248 and 249 of the penal code, Act No. 328, Pub. Acts 1931 (Comp. Laws Supp. 1940, §§ 17115-248,17115-249, Stat. Ann. §§ 28.445 and 28.446).
Parmelee claims that the paper in question is not an “accountable receipt.” It does not lie in his mouth to make this claim because he brought an action in the justice court upon the instrument, and cannot now deny its “accountable” nature.
The variance asserted in the recital of the receipt in the information and the language of the exhibit itself are not sufficient to make the receipt inadmissible in the criminal action.
The cited statutes require proof of fraudulent intent and appellant claims that no evidence of such intent was produced1. If the receipt is a forged one, the intent to defraud by uttering it was sufficiently shown by the action which Parmelee brought on it against Turnwald in the justice court.
The question raised of the claimed impropriety of an examination of the questioned instrument in the handwriting laboratory and the question of undue emphasis in the' court’s charge by gratuitous mention of the crime of uttering when the jury requested further instruction concerning the venue of the claimed forgery are both inconsequential.
There was no impropriety in the laboratory examination of the claimed receipt and the trial judge’s statement to the jury was correct and did not unduly emphasize the charge of uttering.
The sentence imposed is affirmed.
North, C. J., and Starr, Wiest, Butzel, Sharpe, Boyles, and Reid, JJ., concurred. | [
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Bushnell, J.
Thirty-three police officers of the city of Detroit, who had been indicted by the so-called one-man grand jury conducted by Circuit Judge Homer Ferguson, were subsequently tried together with John Roxborough and Elmer Ryan. See People v. Roxborough 307 Mich 575, and People v. Ryan, 307 Mich. 610 They were either found not guilty or the information which had been filed against them was dismissed on motion. Immediately after the conclusion of the criminal trials, written charges were filed with the superintendent of police, charging each of them with conduct unbecoming an officer.
Under the provisions of title 4, chap. 21, §§16 and 17 of the charter of the city of Detroit, the trial board1 of the Detroit police department consists of the commissioner of police, or deputy commissioner of police, the chief of detectives, or such assistant as he may appoint, and the chief inspector of police. In these cases, John H. Witherspoon, commissioner of police, acted as chairman of the board, Paul H. Wencel, chief of detectives, and Lonis L. Berg, superintendent of police, acting-in the capacity of chief inspector, sat with the commissioner as members.
Separate hearings were had before the trial board of the Detroit police department and five of the officers were found not guilty and ordered' reinstated; 28 were found guilty and1 dismissed from the department. Twenty-three of the officers dismissed filed petitions for writs of certiorari in the circuit court for the county of Wayne, 21 of which petitions were granted.
Each petition was heard separately and separate orders were entered vacating the orders of the trial board dismissing the 21 petitioners from the Detroit police department. As to these petitioners the trial judge found that their “trials” were unfair, and the action of the trial board in dismissing them from the force was arbitrary and capricious. In each instance the trial board filed a claim of appeal and the officer concerned filed a claim of cross-appeal. By stipulation, the 21 cases were consolidated on appeal.
The trial court’s conclusions were based principally upon the fact that the trial board permitted witnesses to be questioned by reading to them, not the entire transcript of the testimony they gave in the criminal cases, but only portions thereof, and asking them whether their answers were true; and in some instances by reading such transcript in the total absence of the witness who gave such testimony. The trial court held that this use of transcripts was without precedent in the law and that such testimony was pure hearsay and of no evidentiary value even though no objection was made by the- officers concerned to the introduction of such transcripts before the trial board.
Title 4, chap. 21, § 16, of the charter of the city of Detroit reads in part as follows:
“No member of the police force shall be removed from the force except upon written charges preferred against him to the commissioner and after opportunity of being heard in his defense, but the commissioner may suspend any member of the force pending the hearing of the charges against him. Any member of the force deeming himself excessively penalized may demand a hearing.”
Petitioners contended before the trial court and contend here that the trial board does not have original jurisdiction to hear and determine charges against a police officer, and that their rights under the charter were denied because they were not afforded an opportunity to be heard in their defense before the commissioner, nor were they penalized by him; and they contend, therefore, that the proceedings before the trial board were a nullity.
The trial judge did not agree with this interpretation of the charter although he characterized the section as “a masterpiece of ambiguity which practically defies judicial or other interpretation.”
Appellants contend that the hearings were had in accordance with long-established practice and that, since no procedural objections were made at the hearing before the trial board, which took many weeks, the procedure followed should be approved under the theory of practical construction.
It is well settled that the construction placed upon statutory provisions by any particular department of government for a long period of time, although not binding upon the courts, should be given considerable weight. Board of Education of the Union School District of the City of Owosso v. Goodrich, 208 Mich. 646, 652, and People v. Robinson, 241 Mich. 497. It does not appear that appellees’ and cross-appellants’ rights were prejudiced by an original hearing before the trial board.
The controlling question is whether the trial judge was correct in applying to police trial hoards the general rules of procedure and evidence as are applied in a trial at law. The court said in Mapley v. City of Pontiac, 288 Mich. 396, in discussing certain provisions of the charter of the city of Pontiac:
“Trial before the police and fire trial board1 supplanted the former method of power of dismissal of police and firemen without formal charges and a public hearing, but the purpose thereof in conception and operation is wholly administrative. The charter provision checks hasty and inconsiderate action, prevents autocratic tendencies and publicizes the proceedings. The hearing or trial before the board is not a trial at law but a proceeding in the nature of an administrative inquiry or inquisition and the purpose thereof is accomplished if there is a fair hearing upon specific charges supported by evidence. The action of the board is-open to public consideration but not to judicial review in the sense of an appeal nor by certiorari, except it is made to appear as matter of law the essentials of jurisdiction have not been followed. The proceeding was administrative and, under the terms of the Charter, the finding of the fact by the board is final if supported by evidence.”
A similar view was.expressed by the United States supreme court in Federal Communications Commission v. Pottsville Broadcasting Co., 309 U. S. 134 (60 Sup. Ct. 437, 84 L. Ed. 656), as summed up in the headnote of the reported case in 84 L. Ed. as follows:
“The differences in origin and function of courts and of administrative agencies preclude the wholesale transportation to administrative proceedings of the rules of procedure, trial and review which have evolved, from the history and experience of courts.”
And the court said:
“To be sure, the laws under which these agencies operate prescribe the fundamentals of fair play. They require that interested parties be afforded an opportunity for hearing and that judgment must express a reasoned conclusion.”
The record shows that in the proceedings before the trial board in the cases of appellees Aller, Blum, McManamon, Harrison, Lessnau, Yorpagel, Buckles, McKeon, Purdie, Kennedy, Kloka, McNinch, Ryckman, Welke, Finney, Slavin, Wilcox, and Bellm, witnesses appeared and either verified the testimony they had given in the criminal cases or gave additional testimony. In the cases of Berry, Carbary, and Edom, witnesses were not present at the trial board’s hearing and their testimony in the criminal trials was read from the transcripts without objection. In the case of McKeon, although a witness appeared before the court, his testimony was weak and he did not expressly state that he had paid any money to McKeon, nor could he tell to whom he had paid money. At this hearing the testimony of this witness in the criminal trial was also received witho'ut objection.
Noting that the testimony given in the criminal trials of McKeon, Edom, Berry and Carbary was not authenticated by the court stenographer who prepared the transcripts, and that no witness had appeared in substantiation of this testimony, the trial judge determined that such testimony should be excluded and found as a result that, without it, there was no testimony or evidence before the trial board to justify its actions in these cases. In the other cases he concluded that he could not determine how much weight was given to the unauthenticated transcripts, and therefore such trials were unfair.
It is unnecessary to plant decision in these appeals upon the failure of the officers in question to object to the reception of such testimony, as we are mainly concerned with the proposition that, in the review of such matters by certiorari, “the finding of fact by the board is final if supported by evidence.” Mapley v. City of Pontiac, supra.
When they adopted their charter the people of the city of Detroit committed to the trial board of their police department the responsibility of determining the propriety of the “acts, conduct or omissions” of the members of the police department (title 4, chap. 21, § 16) and the board is required to pass judgment when written charges are preferred, and1 if such charges are sustained, to remove the officer in question from the force or subject him “to such other penalty as the board may prescribe.”
Law and order can only be maintained in the hands of police officers who are, in the opinion of their superiors, fit and proper persons to administer and enforce the law. Such responsibility should not be curtailed or circumscribed by insistence upon the application in each instance of technical rules as to admissibility of proof, even though the finding of fact by the board must be “supported by evidence.” On the other hand, the police trial boards should be free to work out their own rules of procedure and pursue such methods of inquiry that will permit them to adequately discharge their responsibilities to the public. The rules of fair play in such instances are of far more importance to the public and the police officers concerned than is the application of strict legal procedure.
As said in Fraternal Order of Police v. Lansing Board of Police & Fire Com’rs, 306 Mich. 68, 79:
“Those who serve the public, either as the makers of the law, the interpreters of the law, or those who enforce the law, must necessarily surrender, while acting in such capacity, some of their presumed' private rights.”
In that case the court was unanimous in stating that it cannot be denied “that when a person is appointed and becomes a member of the police department, he subjects himself to the reasonable rules and regulations adopted by the board.”
Although, in our judgment, the police departments of the State should not be hampered by requiring them to retain an officer in the police force merely because his “acts, conduct or omissions” cannot be substantiated by strict legal evidence, there must be some competent evidence to sustain the action of the trial board. This court has held as follows:
‘‘ The board of police commissioners do not act as a court, and the formal and1 technical rules of pleading and practice do not apply to their investigations.” Wellman v. Board of Metropolitan Police of the City of Detroit, 84 Mich. 558, 561.
“With the strength or weakness of the case against Mr. Bolger, we have nothing to do; our inquiry is limited to ascertaining whether there was any competent evidence, however weak, tending to sustain the findings of the common council. We agree with the circuit bench that there was such evidence and the judgment is affirmed.” Bolger v. Detroit Common Council, 153 Mich. 540, 559.
“The instant case involves an employee policeman, whose character must be above reproach and whose truthfulness must be above suspicion. His veracity and integrity must be relied upon in the performance of his duties and the trial of criminal cases.” Calvert v. City of Pontiac, 288 Mich. 401, 403.
An examination of the record requires the conclusion that each officer was afforded ample op portunity to meet the charges preferred against him, and that there was competent evidence presented in each of the cases, except those of McKeon, Edom, Berry and Carbary, to support the conclusion of the trial board that such officer should be dismissed from the force.
The order of the trial court in each instance, except McKeon, Edom, Berry and Carbary, is vacated and the several writs of certiorari are dismissed. In each of the cases of McKeon, Edom, Berry and Carbary the order of the trial court is affirmed without prejudice to further proceedings before the trial board as to these four petitioners. Because of the nature of the appeal, no costs will be allowed. It is so ordered,
North, C. J., and Starr, Wiest, Butzel, Sharpe, Boyles, and Reid, JJ., concurred. | [
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Butzel, J.
Defendant was convicted of murder in the first degree. It was shown that he and one Tony Kozakiewiecz robbed a gasoline station in Owosso, Michigan, on the night of July 20, 1943; that while defendant kept watch outside, Kozakiewiécz entered the station and shot George Shaw, the attendant, who died a few days later. Kozakiewiecz and defendant divided the proceeds of the robbery, áp proximately $30. It is unnecessary to set forth the many other details of the robbery in view of the questions involved as propounded by appellant and to which we limit our opinion.
It is claimed that the acting prosecutor, both in the opening and closing addresses to the jury, indulged in such highly inflammatory and. prejudicial remarks that defendant did not have a fair trial, and that objections on the part of defendant’s counsel would not have eradicated the harm done. Defendant’s counsel at the time of the trial made no objections to the remarks.
We have carefully examined the remarks. We .find that they were not so prejudicial or improper as to call for reversal, particularly in view of the fact that no objections were made. They did' not call for any exception to the general rule that objections to argument not made at the trial but made for the first time on appeal will not be considered. People v. Goldberg, 248 Mich. 553; People v. Connors, 251 Mich. 99; People v. Korn, 217 Mich. 170.
Counsel for defendant claims that there was error in the introduction of . certain sworn statements made and signed by Kozakiewiecz and two other parties by the names of Jolly and Losey. Kozakiewiecz made a number of statements that contain inconsistencies. His first one did not implicate defendant. He excuses the omission on the ground that he was fearful of bodily harm from defendant. His other two statements not only show that he and defendant perpetrated the robbery in question but others as well. Two statements of Donald Jolly also contain glaring inconsistencies but they do set forth many other crimes in which he said defendant was an active participant. Losey also made a written statement to the effect that he and defendant committed a number of larcenies. These statements un doubtedly had a very damaging effect. They were introduced not by the prosecution but by the attorney .for defendant. He asked1 that the entire statements be - introduced. No error can be complained of under the circumstances.
The sole witness against defendant was Kozakiewiecz. He pleaded guilty to the crime. He described the minute details in connection with the robbery and murder, and defendant’s active participation in it. Notwithstanding any inconsistencies in his previous statements, he was positive in his testimony. Defendant took the witness stand and denied participation in any of the robberies and the murder. He stated that at the time of the perpetration of the crime charged, he was in Detroit where he and his family had been living for some time prior to the day of the robbery. Notwithstanding that he gave a defective notice of an alibi, the court admitted the testimony of nine witnesses corroborating defendant’s testimony that at the time of the murder he was at his home in Detroit and could not have been in Owosso, Michigan. The jury, however, believed the testimony of Kozakiewiecz. Evidently the jury decided that the alibi witnesses were either mistaken as to time or else that they did not tell the truth. Defendant claims that the trial judge in his charge should have directed the jury to look with suspicion on the testimony of.a self-confessed murderer and perjurer. The correct rule is well stated in 1 Gillespie on Michigan Criminal Law & Procedure, § 379:
‘ ‘ The credibility of an accomplice, like that of any other witness, is exclusively a question for the jury, and it is well settled that a jury may convict on such testimony alone, and it is not error for the court to refuse to charge that it is not. safe to convict a defendant, on the uncorroborated testimony of an accomplice.”
Many eases are cited1, including People v. Dumas, 161 Mich. 45, which has many features resembling those in the instant case. Also, see People v. McCrea, 303 Mich. 213. The trial judge probably would have charged the jury to carefully consider the weight of the accomplice’s testimony had defendant’s counsel made the request. There was no error.
Judgment is affirmed.
North, C. J., and Starr, "Wiest, ÍBushnell, Sharpe, Boyles, and Reid, JJ., concurred. | [
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Sharpe, J.
The bill of complaint was filed by plaintiff to reform a warranty deed and correct a mistake therein as to the description of the land conveyed. Plaintiff obtained title to the property June 21, 1888, by warranty deed from Charles L. Davis and wife. The description in this deed was as follows:
‘‘All that certain piece or parcel of land situate and being in the township of Grand Rapids, county of Kent, and State of Michigan, and described as follows: towit, all that certain piece or parcel of land in section thirty-four (34) town seven (7) north of range eleven (11) west lying and being in the county of Kent, in the State of Michigan, which is bounded and described as follows: Commencing on the west line of section thirty-four (34) 29.24 chains north from the southwest corner of said section to the center of the Clinton road, so-called; running thence south 57 degrees east along the center of said road, 30.54 chains to the place of beginning; thence north 25 degrees 30 minutes east 15.35 chains to the margin of the lake; thence south 70 degrees east along the margin of lake, 2 chains; thence south 23 degrees and 30 minutes west 15.95 chains to the center of Clinton road; thence north 57 degrees west, 2.50 chains to the place of beginning, containing 3 and 42/100 acres of land.”
Plaintiff first gave defendants a contract of purchase, and in this contract the property was described as follows:
“All that certain piece or parcel of land situate in the township of East Grand Rapids, in the county of Kent, and State of Michigan, described as follows, viz.: Part of the southwest fractional quarter of section numbered thirty-four (34) in township numbered seven (7) north of range numbered eleven (11) west bounded as follows: Commencing in the center of Lake drive two thousand fifteen and 64/100 (2,015.64) feet southeasterly from intersection of center of Lake drive with the west line of section thirty-four (34), thence easterly in center of Lake drive one hundred and sixty-five (165) feet, thence north 25% degrees east to Reeds lake, thence west along said lake one hundred and sixty-five (165) feet, thence southerly to the place of beginning.”
This contract was dated November 29, 1920, and the deed in question was given December 15, 1921. In the deed the exact description contained in the contract was inserted, thereby making the same mistake. The difference in description in the deed given to plaintiff and the one given by him to the defendants is in the width of the land running along the lake. The parcel of land which plaintiff owned contained 3.42 acres and had a frontage on the lake of only 132 feet, while his deed to defendants described it as being 165 feet.
As this case must be reversed, the testimony taken upon the trial will be referred to and quoted at some length. Herman VanAalderen testified that he had been in the abstract business for 50 years, and was acquainted with all of the parties to the transaction. That plaintiff and Mrs. Veenboer, at the time the contract was made, came to his office together, but not by any previous arrangement. At her request he examined the abstract for Mrs. Veenboer and told her the title was all right and then he prepared the contract, but no one told him what description to put in.
“Q. Now, from where did you get the description?
“A. I don’t know. I made a mistake there; I admit that.
“Q. Now will you just tell what mistake you made?
“A. I made a mistake in the course along the lake. The description should be 2 chains and 50 links along Lake drive and 2 chains along the lake shore, and I figured 165 feet having the north side and the south side alike. By making it in feet instead of chains and links, I made the mistake; that is all, because Mr. Schoenfield didn’t get only 2 chains and 50 links on Lake drive where he gets two chains along the lake shore. Later on I drew the deed from the contract and consequently made the same mistake over. _ This is the deed that I prepared later. (Paper received in evidence and marked plaintiff’s Exhibit 4.) The original mistake was made in the contract, and the deed followed the same mistake over and over again, instead of figuring out, because I didn’t look at the abstract any more. I first learned that this mistake had been made when Mr. Veenboer called my attention to that last fall, or last summer.”
On cross-examination this witness testified in part:
“Q. (Showing witness paper) : Now, how did you get the description as given here in this land contract, Mr. VanAalderen?
“A. Well, the last word is here on the 165 feet, I made a mistake on the figure.
“Q. I ask you how you got the description?
“A. How I got the description? I figured on the feet along the shore instead of saying 2 chains. I figured on the same way probably on Lake drive, the 2 chains and 50 links, and made it 165 feet in all.
“Q. Well, w"hat did you translate into those terms there, from what did you translate?
“A. Well, from memory probably or from going along the courses.
“Q. Not from a reference to the abstract?
“A. No, I made the mistake there; that is all. This document was not signed in my office. I gave it to Schoenfield or somebody and they took it away and signed it. I next saw these people when they got their deed. They did not interview me at any time in regard to this matter between the making of the contract and the making of the deed. I made up the deed on the same date as the acknowledgment, and copied the description right out of the contract, word for word. I did not have these land contracts in the meantime. I don’t know whether Schoenfield brought in his copy of the contract to make the deed or not. I presume he did, because otherwise I would have made it from the records and would have found the mistake. My recollection is that Mr. Schoenfield brought in the contract and I made the deed from that. Dr. and Mrs. Veenboer were not present at the time I made this deed and took Mr. Schoenfield’s acknowledgment.”
The plaintiff testified on direct-examination that at the time he negotiated the sale of the property to Dr. Veenboer and his wife the following occurred:
“I first heard about the Veenboers with reference to buying my place from my daughter-in-law who wrote me at Cheboygan. After she had written me I wrote them that I would come down and meet him. That is the first time I met Dr. Veenboer and his wife. They came to my house. I was there when they came in. My daughter-in-law introduced me. We sat down. I remember the doctor was seated to my right and the Mrs. to my left, and my daughter-in-law right across from me, and for two or three minutes they were in the doctor asked me, ‘What is your frontage on the lake, Mr. Schoenfield, and on the street?’ I told him on the street, it used to be called Clinton road, when I got it they called it, now Lake drive, I have got 10 rods on Lake drive, 165 feet. It runs narrower towards the lake; I have 8 rods of lake front, 182 feet.
“Mr. Swarthout: I object to that, your honor, for the same reasons I have given. It tends to vary and modify the terms of this man’s contract and deed, and is incompetent.
“The Court: Well, the objection is overruled. The answer will stand.
“ (Witness continuing) : Then the doctor said, ‘Well, you haven’t got quite as much front on the lake as you have got on the street?’ I said, ‘No, sir.’
“The Court: All this conversation may be taken subject to Mr. Swarthout’s objection.
“ (Witness continuing) : The fences are up on both sides, on the east side and on the west side, and there is not a penny against the property nor one cent of incumbrance, and I have the taxes all paid up and the receipts saved. Then the lady, spoke up, Mrs. Veen-boer, and says, T understand you want ten thousand?’ ‘Yes.’ ‘We haven’t got all the cash, but we will pay you half of it in a month and the balance in a year.’ I says, ‘that will be all satisfactory, but in order to make a bargain, why you better make a small payment down, because that is business.’ He says, ‘That is all right’ and he gave me a check for $100. The lady spoke and says, ‘Where will we go to have the papers made out?’ ‘Any competent man, it doesn’t make any difference to me.’ I says, ‘Herman VanAalderen is a very competent man, and he has an abstract office and Hunt* and Davis have an abstract office.’ And the Mrs. said, ‘We know him, that is all right.’ And they said, ‘We will be down town tomorrow morning any time you say, about half-past 9 or 10 o’clock.’ So we met at the abstract office and seen Herman. At the house in this conversation the total amount of land was mentioned. I explained to him how much I had on Lake drive and on the lake, and I said, ‘not quite three acres and a half; it is a very long strip.’ ”
On cross-examination plaintiff testified on this subject:
“I don’t believe they were in there two or three minutes when the doctor asked me the question, ‘How much lake front have you got and how much on the street?’ I says ‘On the street they called that Clinton road, now they call it Lake drive. I have got 10 rods, 165 feet on Lake drive. It runs narrower towards the lake; I have 8 rods lake front, 132 feet.’ I told Dr. Veenboer that while we were there in the house that day. He or his wife said they were going to build a home on it for themselves. I didn’t know whether they intended to tear down the house in which my daughter-in-law lived. I think they said they intended to build toward the lake front.
“Q. Did they say so?
“A. They said lake front. They did not go over the place with me. I don’t know of their having gone over any part of it. They didn’t go over it while I was there and I didn’t go over it with them. They did not make any measurements while they were there. I didn’t make any measurements while they wére there. The interview I had with them was not very long. It might have been at the utmost half an hour. I don’t hardly think it was that long. The price was stated by me at $10,000. There was no haggling over the price. The lady spoke that we cannot pay it all, but we will pay you half down in a month and the other half in a year, and then I said, ‘Well, it is business to make a small payment down, if you can,’ and they said ‘Yes, we will give you a check for a hundred dollars.’ And they did so, and the Mrs. said then, ‘Where will we go to make out papers?’ and I said ‘any competent man. I know Herman VanAalderen for a good many years, he done nothing else. I knew him in the abstract office; I guess he knew how to make out papers of that kind.’ And they said, ‘We know the gentleman, too, he is all right, satisfactory to us.’ Then we said, when will we meet ? Tomorrow morning, because I want to go back north. Tomorrow morning we will meet at the office at half past 9 or 10 o’clock. I said ‘all right, I will be down,’ and we did. We were not very long in Mr. VanAalderen’s office, while he made out the contract. About a half hour, maybe. * * *
“When I found out there was some trouble about the description I wrote you a letter. I was rather astonished; I didn’t know what to say. I wanted everything what was right an<i I said, ‘if there is a mistake in making out the papers why, Herman VanAalderen must have made a mistake.’ Then I said I was coming down. I went and saw Herman VanAalderen. He didn’t know how he made-the mistake first. Of course we are liable to make mistakes. He didn’t tell me how he had learned there had been a mistake. He didn’t tell me about Dr. Veenboer coming to him.
“The doctor inquired about the lake frontage when he came to see me at my house. ‘ He wanted to know about it. He seemed to be interested in the lake frontage. I don’t know that the lake frontage is the most valuable part. Some like the lake front and others don’t care for the lake front. I suppose the lake frontage in that neighborhood is considered to be quite valuable. I have not inquired what they are selling now. There have been a lot of fine houses built up there in that neighborhood in the last 10 or 15 years farther up, in the woods rather than the lake front. * * *
“My house was on the south end of the lot toward Clinton road, so that the rear of the lot was all open and unimproved and a fine site for a house overlooking the lake. The bluff overlooking the lake from my lot is maybe 65 or 70 feet high. From the foot of the hill to the level of the water in the lake may possibly be 30 or 35 feet. It used to be rather swampy right down on the edge of the lake, but not now. It used to be when I first bought the property, but the lake is going down. These fences went clear to the water of the lake. I guess they were way out to the water of the lake unless somebody took them down. At the time I sold this property the fences went clear to the water of the lake. I kept two cows. I had to build farther out to keep them in.
“Q. At the time you had this interview with Doctor and Mrs. Veenboer, did you know that you did not have 165 feet of land on the lake?
“A. I knew I never had it.
“Q. You knew you never had it, and you knew you had 165 feet on the Clinton road?
“A. On Clinton road, yes, sir, 10 rods in front on Lake drive, and 132. I got tax receipts to show that.”
Mrs. Mabel Schoenfield, daughter-in-law of the plaintiff, corroborated him in much of his testimony. On direct-examination she says that Dr. Veenboer asked plaintiff how much land he had, and plaintiff replied not quite three acres and a half; he said “I have 10 rods. I have 165 ffeet on Clinton road now called Lake drive, and I have 132 feet or 8 rods on the lake front.” Dr. Veenboer spoke up and says, “Mr. Schoenfield, you have not as much land on the lake as you have on the road” and my father-in-law spoke and said “No, I have not.” She also stated that she did not remember of anything being said about the fences, and that she did not see the defendants look over the property.
Prior to 1914 defendants had purchased on land contract from Mr. Bonnell a little over an acre of land which adjoined that of plaintiff on the east. It did not run to either Lake drive or to the lake, but fronted on Reed’s Lake boulevard. They built a garage on the property and lived in it for about two years, intending to build a house there. While living on this property the defendants became more or less familiar with the plaintiff’s property. Mrs. Veenboer, one of the defendants, testified that she found out that plaintiff’s property was for sale about a year after they had moved from their land adjoining; that they were more or less familiar with the premises because of having lived there. Examined by her counsel, she testified:
“Q. Well, now, I wish you would tell us just what conversation was had between the four of you in regard to the size of that lot.
“A. We were told that the size of the lot was a little over three acres and that there were 165 feet on Clinton road running back to the lake.
“Q. Was there anything more said by the Schoen-fields or either of them in regard to the description of the property?
“A. I have absolutely no recollection of anything further being said as to measurements.”
On cross-examination she testified further, as follows:
“I am the doctor’s private secretary. I have his power of attorney. He has left absolutely all of his business to me.
“Q. Now, you have been with him at times between 1916-1918 that he has gone over the property and looked over the Schoenfield property?
“A. I have.
“Q. Both from the site of the Schoenfield house looking through it east and west and looking at it from the lake?
“A. I don’t think I was with him on the lake because I don’t swim, and I don’t know as I stayed at the house, but from our side of the fence we often stood there and admired it.
“Q. Hoped some day to be able to buy it?
“A. We did.
“Q. And the fences ran down to the lake as he described ?
“A. It did.
“Q. And that is the property you bought, the property between the fences just as he said?
“A. It was.”
Dr. Veenboer, the other defendant, testified on direct-examination as to his talk with plaintiff when arrangements were made to purchase the property as follows:
“Q. Now will you tell us what transpired at this interview ?
“A. At this interview we asked Mr. Schoenfield — I did — as to the property. He told me he had 165 feet on the lake front and that it ran back to the lake.
“Q. Lake drive you mean?
“A. Yes, on Lake drive, or Clinton road, and it ran back to the lake, and that there was something over three acres of property, but no definite amount, exact amount, was stated, and that he wanted $10,000 cash, which we felt we were unable to raise at the time. Well, we said we were unable to raise that at that time and asked to have a little easier terms on the property, and this was accepted, we to pay $5,000 on delivery of the contract and $5,000 at the end of a year, with the interest on the $5,000.
“Q. Was there anything more said by Mr. Schoen-field, as you recall, in regard to the measurements of the property?
“A. He said nothing more to me in regard to measurements of the property.
“Q. Do you recall his having told you in that interview that he had only 132 feet on the lake?
“A. I have no recollection whatever.”
And again he testified in response to a question by his counsel:
“Q. Was there anything in the looks of the fences that indicated to your eye that this was not a parallelogram? * * *
“A. It had the appearance of being a parallelogram.
“Q. And did you buy with the understanding and belief that it was a parallelogram? * * *
“A. I thought it was a parallelogram and bought it that way.”
.On cross-examination the doctor testified:
“I first started living on the property on the east side of the Schoenfield property in the fall of 1916 and lived there until the fall of 1918, winter and summer. Between 1918 and 1920 I lived at No. 1, Auburn avenue, all the time. From 1916 to 1918 I was on the Schoenfield property a few times; I can’t exactly remember, three or four. The building I was living in was about 500 feet north of Lake drive. I 'had a little over an acre. The west line of our property was bounded by the fence on the east line of the Schoenfield property. In this four or five times I had gone from the east line of the Schoenfield property to his house; that is all. Perhaps once I was on their property opposite our house, a little to the north of it, but never went across the property at any time prior to the time I bought it.
“Q. Did you ever go the length of the property from Lake drive to the lake?
“A. Well, certainly on the other side of the fence.
“Q. On which other side?
“A. The east side of the fence from their property.
“Q. No, now I am talking about the Schoenfield to Needs lake through the Schoenfield property?
“A. Not before we bought it. I conceived the idea that I would like to buy the Schoenfield property while I was still living on the old property, and that was prior to the end of 1918. Starting at the hill and going down the hill there is a kind of a plateau leading out to the lake, and there are a lot of trees and bushes and things of that nature and comparatively in their wild state, and they are in their wild state yet, and that was one of the things that caused me to have a desire to purchase their particular piece of land. The growth down there is fairly dense.
“Q. Now, you have never been on the Schoenfield property below the hill prior to the time you bought it?
“A. Not oh the property. I had investigated from a boat drawn near the shore, and that is as near as I had been; I hadn’t been on to the property.
“Q. Well, just where did you stand when you looked at these fences and determined that the property was a perfect parallelogram?
“A. Well, I stood by their house.
“Q. By their house?
“A. Yes, sir.
“Q. And that would be, according to Mr. Swarth-out’s question of Mrs. Schoenfield, on the south of the property?
“A. Yes, sir.
“Q. You couldn’t possibly see the fence over the hill?
“A. No, sir.
“Q. On either side?
“A. No, sir.
“Q. And so you didn’t make any investigation and could not determine then that it was a perfect parallelogram over beyond the hill, could you ?
“A. No.
“Q. Well then, your testimony where you said on direct-examination that this property was a perfect parallelogram, applies only to the situation at the Schoenfield house and you don’t intend to apply it to the property below the hill?
“A. Only so far as one would judge that the fences would continue in the same direction.
“Q. No, no, that is not an answer to the question and I ask that it be stricken out.
“The Court: It may be stricken out as not responsive.
“A. One could see from the lake.
“Q. No, just a minute; I am not talking about the lake at all.
“The Court: Mr. Reporter, will you read that question (question read).
“A. I do intend to apply it to the property below the hill.
_ “Q. All right, now, when did you make the examination of the fences below the hill prior to the time you purchased the property in 1920?
“A. I have often been down the hillside on the east side of the fence, and it was a straight line and I could see from the lake that the fence on the west side was a straight line up over the hill.
“Q. Well, now, you couldn’t see over the east side of the fence on the east side of the Schoenfield land through that growth, that underbrush, the fence on the west line, could you?
“A. Could from the lake though.
“Q. Now, doctor, answer my question. I move that this answer be stricken out.
“Mr. Sivcirthout: It has been answered before.
“The Court: That may be responsive if the doctor means when he is on the lake.
“Q. No, but I asked from the east side from the fence on the east line of the Schoenfield property, if you could see through to the fence on the west side?
“A. Yes, you can.
“The Court: He says he could.
“A. From my position on the lake.
“The Court: Well, I see how you distinguish. I think, doctor, if you will just listen to the question and understand the question.
“(Question read.)
“A. I could see the fence on the west and by my eyes at least.
“Q. Well, now fix the place where you could see through that underbrush and growth standing on the land on the east side of the fence, on the Schoenfield property?
“A. You can stand on the brow of the hill and see right straight across.
“Q. I am talking about below the hill.
“A. All right, you go down to the bottom of the hill, and on the plateau you can see the fence again.
“Q. Well, how much of the fence, how far from the foot of the hill north ?
“A. Oh, about 20 feet.
“Q. Now, how many times did you look at that before you purchased in 1920?
“A. I don’t know 'how many times I have been down there; several times.
“Q. Well, was it in 1918?
“A. In 1916 and 1918.
“Q. Now, how many times did you look at it from the lake?
“A. I think we used to go in bathing and we went in several times and we had a boat and I have seen it several times; I couldn’t say how many times.
“Q. Well, of course looking at it directly south, you couldn’t tell whether it was a parallelogram or not, could you?
“A. No.
“Q. But you knew from 1916 on that there were fences on each side of this property all'the way down to the lake, didn’t you — what was the answer?
“A. Excuse me — I am asserting nearly to the lake; yes, sir.
“Q. Well, the fences were in the water, the posts farthest north were in the water, weren’t they?
“A. Well, not at the present time; not at that time.
“Q. No, in 1916?
“A. Well, they were close enough to the water; I will admit the question.
“Q. And these reeds growing up around the posts are farthest north, aren’t they?
“A. Yes.
“Q. Have you always referred to that property 'between those fences as the Schoenfield property?
“A. Certainly.
“Q. Do you know what the distance was from Lake drive to the lake in 1916 and 1918 ?
“A. I did not then.
“Q. Well, then, you were familiar then, doctor, with this property from where it started on Lake drive all the way through to the lake as early as 1918, weren’t you?
“A. Yes, sir, to a certain degree.
“Q. Well, you were familiar with it all on the high land ?
“A. I had never .been across the property. I had looked across the property.
“Q. Well, up on the highland you could look across the property?
“A. Yes, sir.
“Q. And then you had looked at it both on the low land, both on the plateau and closer to the lake?
“A. Yes, sir.
“Q. And that is the property you and Mr. Veenboer decided to buy?
“A. Yes, sir.
“Q. And first you went to Mrs. Schoenfield and made inquiry and got the price, didn’t you?
“A. Yes, sir.
“Q. And you really didn’t want to buy all of it, but you made inquiry if you couldn’t buy the lake frontage and not buy the rest?
“A. Yes, sir.
“Q. And you also asked her to determine from Mr. Schoenfield what price he wanted?
“A. Yes, sir, Mrs. Veenboer did.
“Q. And the answer came back that he would sell the entire place, piece of land for $10,000?
“A. Yes, sir.
“Q. And that is what you agreed to buy?
66A. Yes sir.
“Q. What you intended to buy when you fixed this deal up with him on the 27th of November, 1920?
“A. Yes, sir.
“Q. That property that you had always considered the Schoenfield property? •
“A. Yes, sir.”
The doctor also testified very positively that he read the descriptions in the contract and deed and noted that they gave the width along the lake as 165 feet. It appears, however, that, in order to raise a portion of the purchase price, the doctor was compelled to give a mortgage on the property to the bank. In this mortgage two descriptions appear, the one in plaintiff’s deed from Davis (the correct description) and the one in defendants’ deed from plaintiff. Had the doctor read this mortgage and paid as much attention to it as he claims he did to the conveyances from plaintiff he would have ascertained that there was a discrepancy in the descriptions. On being questioned on this subject he testified:
“Q. Now you read the mortgage carefully, didn’t you?
“A. Yes, sir.
“Q. Read the entire instrument?
“A. Now, I don’t believe I read the mortgage thoroughly. I read the deed, but I don’t remember I read the mortgage thoroughly at that time until after this came up.”
The trial court found for the defendants, and the decree provides:
"The court finds that the mistake in the description in said deed was due to the default of the plaintiff and that the defendants supposed they were purchasing (under and by said deed of December 15, 1921) 165 feet of frontage on Reeds lake, and that plaintiff at that time did not have and own more than 132 feet of frontage on Reeds lake, and that he cannot acquire the necessary 32 feet at the present time to make his deed good.” •
The decree also provides that the strip of land the defendants are now deprived of is of the value of $2,000, and decrees that plaintiff shall pay them that sum with interest at the rate of 6% per annum from the date of the contract to “the date of the decree. From this decree the plaintiff appeals, and now claims that it is against the overwhelming weight of the evidence, and that the undisputed evidence shows that the defendants received the identical parcel of land they purchased, but, by mistake of the scrivener, one of the boundary lines was improperly described.
There can be no doubt, from the undisputed testimony above quoted, that plaintiff owned no more land than that inclosed by the fences, and that he intended to convey to defendants no greater amount. The abstract correctly described the land, and plaintiff turned it over to Mr. VanAalderen, who drafted the contract, and if he had used it to get the description no trouble would ever have arisen. There is no question but that Mr. VanAalderen made a mistake in the contract description. He positively asserts it, and no one disputes it. Was the mistake in description mutual between the seller and the buyers? We think it was. Mrs. Veenboer was present when the contract was made, and had Mr. VanAalderen examine the abstract for her to see if the title was in the plaintiff. He advised her it was, but had he examined to see in whom the title was to the land he conveyed, he must have advised her otherwise.
Everything throughout the entire transaction between the parties points irresistibly to the conclusion that there was a mutual mistake. The defendants had been very familiar with this property for years. They, had looked it over from every angle. They must have known that the fences marked the boundary lines, and if, when they came to buy it, they were as particular about the dimensions as they now are, they unquestionably asked plaintiff the number of feet along the road and the number of feet along the lake, just as plaintiff testified they did, and if they asked him, he must have replied in substance as he claims that the land was 10 rods along the road, and only 8 rods along the lake, because that was what the abstract of the land clearly showed.
We are convinced, too, that if Dr. Veenboer examined his contract and deed carefully as he says he did, that he also examined the mortgage he gave on the place, which contained the correct description, and knew then what his deed contained.
Plaintiff cites Conlin v. Masecar, 80 Mich. 139, which is very similar in its facts to the instant case, and is authority that equity may give relief where by mistake the intent of the parties has not been expressed.
“The right of a court of equity to correct a written conveyance so as to carry out the intention of the grantor, where a mistake has been made by the scrivener, is well established.” Newland v. Baptist Church Society, 137 Mich. 337, and authorities there cited.
“The mistake must be mutual. For relief by reformation in equity, it is essential that the error be made by both parties, and that it be admitted by defendant or distinctly proven.” Miles v. Shreve, 179 Mich. 679, and authorities cited.
The facts here clearly establish a mutual mistake, a condition which brings the case within the rule of law giving courts of equity power to correct a written instrument. Defendants first complained when their landscape gardener advised them that there was a less number of feet along the lake than their deed called for. They were perhaps disappointed, but they both admit that they understood and knew all along that they were buying the land inclosed by the fences and nothing more.
The decree should have granted the relief prayed by plaintiff as to information of the deed, without Such a awarding any damage to the defendants, decree may be entered.
Cíase reversed, with costs of both courts to plaintiff.
Bird, C. J., and Steere, Fellows, Wiest, and Clark, JJ., concurred. Snow and McDonald, JJ., did not sit. | [
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WIEST, J.
The prosecuting attorney confesses error. In this he does well, for the error is patent. Defendant should have been discharged at the trial. Defendant was tried under an information charging him with larceny of an automobile, and with receiving the same automobile, knowing it had been stolen. He was acquitted of larceny and convicted of receiving stolen property.
The automobile was stolen April 6, 1925, in the city of Detroit, and was found in defendant’s possession at Columbus, Ohio, on the 11th day of May, with numbers changed, except secret numbers of the manufacturer. Defendant was arrested in Ohio and brought to Detroit for trial. There was no evidence that defendant was in Detroit at or about the time of the larceny. Defendant was a witness and testified he bought the automobile in Ohio, gave the name of the man from whom he purchased, and produced written evidence of the sale to him. Outside of showing a. larceny and the finding of the stolen automobile in defendant’s possession in the State of Ohio, over a month after the larceny, with numbers changed, the people offered no evidence. There was no showing, by direct or circumstantial evidence, that defendant received the property within the jurisdiction of the recorder’s court. If the jury did not believe the testimony given by defendant this was of no help to the prosecution. It is elementary, and the statute so provides, that one receiving stolen property, to be-guilty of a crime, must have knowledge that it was stolen. This knowledge may be shown either by direct evidence or by facts reasonably imputing knowledge, but cannot rest upon mere suppositions.
We need not repeat what was said by this court in Durant v. People, 13 Mich. 351; People v. Mullis, 200 Mich. 505; People v. Tantenella, 212 Mich. 614.
The jury having acquitted defendant of larceny, and the automobile having been found in the State of Ohio; there being no evidence, except possession by defendant in 0'hio, and no evidence from which the jury could find that the automobile was received by defendant in the city of Detroit, the defendant should have •been discharged for want of evidence showing the commission of the crime of receiving stolen property within the jurisdiction of the court, or anywhere else. We find no occasion to discuss other errors alleged.
The conviction is set aside, judgment reversed and defendant discharged.
Bird, C. J., and Sharpe, Snow, Steere, Fellows, Clark, and McDonald, JJ., concurred. | [
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Bird, C. J.
The plaintiff had judgment in the sum of $8,000 in a personal injury case, and defendant reviews the proceedings by error. Plaintiff lives on Maple street on the north side of defendant’s interurban railway track in the village of Michigan Center. Late in the afternoon on the 7th day of October, 1923, plaintiff left his home, a few rods north of the railway intersection, with his automobile. He was occupying the front seat and his wife and a lady companion the back seat. He drove to the intersection, and stopped about 10 feet from the north rail. He looked and listened but neither saw nor heard any car. He then started across. The road was sandy and there was no planking against the rails. As he started he glanced to the east and saw nothing, and then looked to the west. The car was close to him and coming very fast. He proceeded, but before his rear wheels cleared the track the car struck his automobile, demolishing it, killing his wife and the lady companion, and injuring him. This suit was begun to recover for his injuries and the damages to his automobile.
The negligence of defendant principally relied upon by plaintiff was excessive speed and want of any warning of the approach of the car. The defendant argues in this court that the court erred in refusing to direct a verdict for defendant because no negligence of defendant was shown, and it was further contended that the plaintiff was guilty of contributory negligence.
Was the Whistle Sounded ? Several witnesses testified that the whistle was not sounded. All of them, save one, qualified themselves to be witnesses on that question by showing circumstances which tended to show that they were watching for the car and for the signal. One of them, the attorneys were in dispute as to his testimony, so the court left it to the jury to determine what his testimony was and instructed them if he testified as defendant contended his testimony would have no probative value. There was testimony that the whistle was sounded. We think there was competent testimony to carry that question to the jury.
Excessive Speed. The testimony fixing the rate of speed the car was going was all the way from 35 to 65 miles an hour. The motorman admitted he was behind his schedule and was trying to make up time. The proof is rather convincing that the car was going at least 50 miles an hour, but whatever the rate of speed was, it was going very fast, and it was a question for the jury to determine, under all the circumstances and surroundings, whether it was prudent for defendant to operate its car through the village at the speed at which it was going. Hudson v. Railway Co., 227 Mich. 1. In the case cited, which was very similar on the facts to the one we are considering, we discussed the rule and said, in part:
‘‘The principal items of negligence asserted by the plaintiff in his declaration and proofs were excessive speed, failure to keep the electric crossing bell in repair, and a failure to give the customary crossing signal. The testimony shows the train was moving from 40 to 45 miles an hour. Whether that rate of speed was excessive is a relative one. It depends on the attendant circumstances. A rate of 40 or 45 miles an hour in the open country would not be negligence^ as a matter of law, and conditions might be such that it would not be negligence to pass through a village at that rate of speed. It would depend, however, on how well the crossing or crossings were protected, how straight the track was, whether the view of one crossing the tracks would be obstructed by curves, cars, foliage or buildings. Thayer v. Railway Co., 93 Mich. 150; Guggenheim v. Railway Co., 66 Mich. 150; Ommen v. Railway Co., 204 Mich. 392, and cases cited.”
We also quoted with approval the following paragraph from 22 R. C. L. p. 947:
_ “The general rule is that in the absence of a prohibitory statute or ordinance a railroad company may ordinarily run its trains at such speed as it sees fit, and that a charge of negligence cannot be predicated on the rate of speed at which a train is run, unless there are attendant circumstances which make such speed negligence. A rate of speed that would be entirely safe under some conditions may, however, be recklessly dangerous under other conditions, and it is generally held that it is for the jury to determine whether or not the speed at Which a train was operated was negligent under all the circumstances.”
So we conclude in the. present case whether it was negligent for defendant to run its cars through the village at the high rate of speed it was going would depend upon the population of Michigan Center, how well the crossings were guarded, how straight the track was, how much travel there was in the village, and to what extent the view of the railroad track was obstructed by buildings, poles and foliage. ' The jury inspected the location and had an opportunity to observe what the surroundings were. This enabled them to better understand the evidence bearing thereon. This question was one for the jury.
Contributory Negligence of Plaintiff. Plaintiff drove to the railway track and stopped about 10 feet from the track. He looked and listened and saw no car approaching. He started up and looked again when he had a better view. There was nothing insight from the east. He glanced to the west and the car was dangerously near him. He was then on the track. He concluded it would be better to proceed, but for the lack of a second more time he failed to clear' it. His view to the west was interfered with by a thornapple tree about 23 feet from the highway, whose branches extended into the railway right ’of way from 4 to 6 feet. A large sign, located 117 feet west of the highway, interfered with his view. Besides these, the photographs show that the right of way was a narrow one, and that poles and trees were farther to the west. From where he stood 10 feet from the track he could see from 100 to 150 feet to the west. Counsel argue that if plaintiff had stopped his motor when he stopped his car he, doubtless, could have heard the car approaching, and that if he had stopped further north he would have had a better view to the west. We think these are arguments that should be addressed to the jury. Because he failed to do those things it cannot be said, as a matter of law, that he was negligent (Nichols v. Railway Co., 203 Mich. 372), although the jury might find that he was guilty of contributory negligence for having omitted to do those things. It all gets back to the question as to whether the plaintiff conducted himself as an ordinarily prudent man would have done under similar circumstances. It was clearly a question for the jury. 22 R. C. L. p. 1031.
The defendant requested the submission of the following special question to the jury, and complains because it was not given:
“Did the motorman, Buck, see the plaintiff’s automobile north of the tree, as testified to by him?”
Had the question been submitted and answered in the affirmative, it would not have been inconsistent with the general verdict, because of the fact that Buck might have seen plaintiff’s automobile in a certain position when plaintiff was unable to see him. The conditions of their viewpoint differed. Buck was up high on the car platform and plaintiff was very much nearer the ground. The condition of the foliage might have permitted Buck to see plaintiff and precluded plaintiff from seeing Buck or his car. We think there was no error in the refusal.
We have considered the other assignments, but find no reversible error in them. Many of the assignments involve the same questions that we have already considered. The case was very well submitted to the jury. It was made clear to them by the court what the questions were for solution, and many of the court’s suggestions were helpful to aid them in their solution.
The judgment of the trial court is affirmed.
Sharpe, Snow, Steere, Fellows, Wiest, Clark, and McDonald, JJ., concurred. | [
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Boyles, J.
In this case the appellants challenge the validity of an ordinance of the city of Detroit prohibiting the maintenance of existing projecting sidewalk signs and regulating the size of marquees over sidewalks on Woodward avenue between Grand boulevard and the Detroit river. The several plaintiffs filed separate bills of complaint in the Wayne county circuit court for a declaration of their respective rights to maintain existing marquees and signs, asked that the ordinance in question be declared unconstitutional and that the city authorities be permanently enjoined from enforcing the same.
The circuit judge after hearing testimony and arguments held that the ordinance in question, effective October 23, 1941, was valid and entered decree accordingly. The court also decreed that the ordinance previous to October 23, 1941, was invalid and enjoined the city from further prosecution of any proceedings thereon begun prior to that date. The city does not cross-appeal and therefore accepts that provision in the decree. All plaintiffs appeal.
A proper understanding of the situation as it applies to each of the plaintiffs requires a detailed statement of facts as applied to each of them, and of the ordinances on which they largely base their respective claims. Counsel in their’ respective briefs agree on the essential facts.
Appellants 1426 Woodward Avenue Corporation and Graystone Ballroom, Inc., are the owners of marquees located in front of their buildings at 1426 Woodward avenue and 4237 Woodward avenue, respectively. Appellants James Vernor Company, R. H. Fyfe & Company and Grinnell Brothers are the owners of projecting signs located in front of their buildings at 239, 2001 and 1515 Woodward avenue, respectively. All of the aforesaid marquees and signs were installed under special permits granted by the common council, which permits were expressly made revocable and, as we shall see, were revoked by action of the common council, and by ordinances No. 298-C, as amended, No. 4-D and No. 62-D of said city. Ordinance No. 4-D amended section 5 of ordinance No. 298-C, and ordinance No. 62-D amended sections 1, 2 and 5 of ordinance No. 298-C.
Ordinance' No. 298-C relates to projecting signs and marquees in that section of Woodward avenue between Adams avenue and Grand boulevard, and ordinance No. 62-D relates to that section of Woodward avenue between Adams avenue and the Detroit river. These ordinances prohibit all projecting signs and all marquees projecting more than one-half the width of the sidewalk, or more than 10 feet. In 1941 this width was amended to read “more than 10 feet, 6 inches.”
However, as to marquees, section 4 of ordinance No. 298-C (which section was unamended by ordinance No. 4-D and No. 62-D) provided that “marquises larger than permitted herein shall not be constructed without special permission from the common council.” Acting under this proviso, the common council proceeded to grant special permits to several owners of marquees on Woodward avenue to maintain the same even though they exceeded the width prescribed by the ordinance. These special permits were all granted subsequent to January 11, 1935, which was the effective date of ordinance No. 298-C.
The following marquee owners received such special permits, pursuant to section 4 of ordinance No. 298-C:
1— Fox Theatre, 2211 Woodward avenue
2— Detroiter Hotel, 2560 Woodward avenue
3— Colonial Theatre, 2611 Woodward avenue
4— Fine Arts Theatre, 2454 Woodward avenue
5— Mayfair Theatre, 3450 Woodward avenue
6— Arcadia Ballroom, 3527 Woodward avenue
7— Garden Theatre, 3927 Woodward avenue
8— Forest Theatre, 4635 Woodward avenue
9— Hotel Roberts, 5725 Woodward avenue
10 — Center Theatre, 6540 Woodward avenue
In all these cases, special permission was granted by the common council subsequent to January 11, 1935, being the effective date of ordinance No. 298-C, to maintain marquees wider than the ordinance prescribed, covering that part of Woodward avenue from Grand boulevard to the Detroit river.
That part of the ordinances referring to the section between Adams avenue and the Detroit river (ordinance No. 62-D) became effective June 1, 1938, and provided that no projecting sign or marquee should be maintained in contravention therewith after June 1, 1941.
' On February 17,1941, the directors of 1426 Woodward Avenue Corporation, one of the appellants herein, filed a petition with the city clerk for a special permit to continue to maintain its marquee at 1426 Woodward avenue. This petition was referred to the commissioner of the department of buildings and safety engineering and to the fire marshal for recommendation. The commissioner of the department of buildings and safety engineering, on May 6, 1941, addressed a communication to the city clerk stating that:
“Petitioner is acting in accordance with the provisions of the ordinance by requesting special permission from your honorable body to have the marquise remain in its present form and size. Since this matter involves a question of policy which was intended to be under the control of the common council and has virtually no connection with safety, this department offers no objection to the petitioner’s request.”
The acting fire marshal, however, recommended that the petition of 1426 Woodward Avenue Corporation be denied, on the ground that the marquee, constructed in 1910 (31 years previously) constituted a fire hazard.
The common council, by a vote of 5 to 1, granted the petition of said 1426 Woodward Avenue Corporation to maintain its' marquee as presently existing. All of the acting members of the common council voted on the petition. Three councilmen, to wit, Dingeman, Ewald and Hamilton, had been removed from office, and their successors had not been elected, so that the common council, ordinarily consisting of nine members, had only six members at the time the vote was had on the petition in question. Said action granting the petition to continue to maintain this marquee was vetoed by the mayor on May 27, 1941. The common council thereupon considered a resolution to override the veto, five members of the common council voted to override it and one to sustain it, but the mayor’s veto was held to be sustained. Appellant 1426 Woodward Avenue Corporation claims tbis veto was beyond tbe powers of tbe mayor and void — that tbe council action stands.
On June 23, 1941, tbis plaintiff 1426 Woodward Avenue Corporation filed tbis suit and secured a temporary restraining order enjoining tbe enforcement of tbe ordinances in question. On July 14, 1941, Hon. Harry B. Keidan, circuit judge, issued an order granting* a temporary injunction against the enforcement of said ordinances.
Thereafter, on July 28, 1941, tbe corporation counsel addressed a communication to tbe common council, stating that:
“Judge Keidan’s principal reason for granting tbe temporary restraining order was because other marquises on other buildings on Woodward avenue, being maintained in violation of tbe ordinance, have been allowed to remain by special permission of tbe common council. ’ ’
Tbe corporation counsel thereupon advised that ordinance No. 298-C be amended, by deleting therefrom that part of section 4 which provided for special permits of tbe common council to maintain marquees wider than one-half tbe width of tbe sidewalk, or more than 10 feet. Accordingly, ordinance No. 217-D was enacted by tbe common council, effective October 23,1941. Tbis is tbe ordinance here in dispute. Since section 4 of ordinance No. 298-C was thus amended, thereby closing tbe door to tbe granting of any further special permits to any other owners of marquees on Woodward avenue, no action has been taken by tbe common council with reference to the ten Woodward avenue marquees protected by special permits granted by tbe common council before tbe special permit clause was stricken from tbe ordinance.
After the adoption of ordinance No. 217-D, the common council adopted another ordinance known as ordinance No. 229-D, which became effective December 25, 1941, and which prohibited on all streets in the city of Detroit, except Woodward avenue, and excepting boulevards, the construction of marquees extending more than one-half the width of the sidewalk, or more than 10 feet beyond the lot line. The commissioner of buildings and safety engineering testified that it would apply to Bagley avenue, Adams avenue, Park avenue, Broadway, Library avenue and Parmer street, on all of which there are existing many marquees wider than the above-mentioned limitation; but, according to the commissioner, the ordinance had no retroactive effect, relates only to future installations and does not interfere with the continued maintenance of any of such marquees. However, neither the opinion of the commissioner nor the pronounced opinion of counsel who tried the case can make final decision on' the construction to be given the ordinance, or preclude judicial determination as to its effect. Whether or not the ordinance in question has a retroactive effect is not before us for decision. According to the record, the following marquees exist on downtown streets adjacent to Woodward avenue, all of which are wider than one-half the width of the sidewalk:
1 — Greyhound Bus Terminal marquee. Width 18% feet. Corner Grand River avenue and Washington boulevard.
2 — Book-Cadillac Hotel. Marquee width 22 feet. Corner of Washington boulevard and Michigan avenue.
3 — Statler Hotel. Marquee width 22 feet. Corner Washington boulevard and Park avenue.
4 — Statler Hotel. (Bagley avenue side) Marquee extends entire width of sidewalk.
5 — Michigan Theatre. Marquee approximately 18 feet wide. 238 Bagley avenue.
6 — United Artists Building. Marquee approximately 15% feet wide. 140 Bagley avenue.
7 — Tuller Hotel. Marquee approximately 15 feet wide. Corner Park avenue and Adams avenue.
8 — Kales Building. Marquee approximately 15 feet wide. Corner Park avenue and • Adams avenue.
9 — Stroh Building and Adams Theatre. 28 and 44 W. Adams avenue. Stroh marquee extends to within 1% feet of the edge of 15-foot walk; Adams marquee to within 3 feet of edge of walk.
10 — Wurlitzer Building, 1509 Broadway. Marquee extends more than one-half the width of sidewalk.
11 — Capitol Theatre Building, 1526 Broadway. Marquee projects entire width of sidewalk.
12 — Crowley-Milner Company, Library avenue at corners of Monroe and Gratiot avenues. Marquees project to within 3 feet of edge of 15-foot sidewalk.
13 — Ford Building. Corner of Griswold and Congress streets. Marquee extends approximately the entire width of sidewalk.
14 — Barium liotel. Corner of Bates street and Cadillac square. Marquee extends approximately the entire width of sidewalk.
The marquee owned by appellant 1426 Woodward Avenue Corporation is an integral part of the store building at 1426 Woodward avenue, which building is occupied by D. J, Healy Shops. The building and marquee were constructed in 1910, The mar quee is constructed entirely of steel, is 60 feet in length and 20 feet in width, which is more than half the width of the sidewalk, and more than 10 feet, 6 inches, being the limitation imposed by ordinance No. 298-C, as amended. The marquee owned by appellant Graystone Ballroom, Inc., is an integral part of the building at' 4237-45 Woodward avenue. It is constructed of steel, extends to within 16 inches of the edge of a 12-foot-wide sidewalk, being wider than one-half the width of the sidewalk. It exceeds, however, by only 2 inches the width of 10 feet, 6 inches. No petition was filed by the owner of the Graystone Ballroom marquee for a special permit to maintain it in its present size and condition. Both of said marquees referred to are constructed at the proper height, namely, not less than 8 feet 6 inches above the sidewalk level, and are supported entirely on the building on which they are erected.
The main issue in the case involving all the appellants is, whether the common council may prohibit the maintenance of existing projecting signs and regulate the size of marquees on Woodward avenue between Grand boulevard and the Detroit river, in said city, while permitting their maintenance, without restrictions, on other parts of Woodward avenue and other adjoining business thoroughfares, without regard to the reasons why such action is taken. The ordinance under consideration has as its purpose the removal of all existing projecting signs, and restricting the width of existing marquees on Woodward avenue from Grand boulevard to the Detroit river. It is conceded that the main, but not the sole, purpose of the ordinance is to improve the appearance of Woodward avenue.
The Michigan Constitution (1908), art. 8, § 28, provides:
“The right of all cities, villages and townships to the reasonable control of their streets, alleys and public places is hereby reserved to such cities, villages and townships.”
The home rule act (1 Comp. Laws 1929, §2238 as amended by Act No. 295, Pub. Acts 1931 [Comp. Laws Supp. 1940, § 2238, Stat. Ann. § 5.2081]) authorizes each home rule city to provide:
“(1) Por the use, regulation, improvement and control of the surface of its streets, alleys and public ways, and of the space above and beneath them.”
The charter of the city of Detroit (title 3, chap. 1, § 12, subd. [g]) provides:
“The legislative powers and duties of the common council shall be as follows: * * * (g) To provide for the management and control of all property, including streets, alleys and other public places, belonging to the city, dedicated to its use or under its jurisdiction; to make provision for its protection, preservation and improvement.”
The validity of ordinance No. 298-C and the amendment must be considered in the light of the powers granted home rule cities by constitutional and statutory provisions. Appellants contend that the exercise of the police power of the city of Detroit over its streets is limited by the constitutional requirement that the control shall be reasonable; that there must appear to exist an essential public need for its exercise in order to justify it; that mere aesthetic considerations cannot justify the prohibition and restriction here sought to be imposed on appellants; and that the absolute prohibition of the existence of projecting signs on Woodward avenue and the restriction of the size of existing marquees thereon under the guise of reasonable regulation exceeds the power of said city. We agree that the crux of the issue in this case as to the legality of the ordinances „in question is, whether they are within the constitutional right of the home rule city of Detroit to a “reasonable” control of its streets. However, control of streets is not limited to the surface, but includes the space above and beneath the surface.
At the outset, appellants insist that the sole and only reason for the action taken by the city is based on: “aesthetic” considerations; that the only purpose is to make Woodward' avenue more beautiful. The record does not justify this position nor did the circuit judge so hold. No authority has been cited to us, or discovered by our research, holding that the reason for enactment of an ordinance must be stated therein. The record does not support appellants’ claim that the commissioner of the department of buildings and safety engineering testified that the ordinances prohibiting signs and regulating marquees are based solely-on aesthetic considerations. He testified:
“Q. So that what we are getting at is that there is no prohibition in any of these ordinances against the maintenance of projecting signs on streets other than Woodward avenue?
“A. That is right, sir.
“Q. Is that based wholly on aesthetics?
“A. I would say it is based on a matter of policy, whatever that may be.
“Q. You mean an arbitrary determination?
“A. Well, I would prefer that the ‘powers that be’ speak for themselves.
“Q. In other words, the ‘powers that be’ say so, and therefore, it is so?
/‘A. I am not in position to interpret. * * *
“Q. You know, of course, Mr. Wolff, being the head of your department, what aesthetics is, and how it applies to the maintenance of streets, do you not?
“A. Yes, I think I do, hut we confine ourselves to matters concerning safety!
“Q. And that is all you do confine yourself to?
“A. Yes, sir.
“Q. Just to safety?
“A. Safety, and — if you are speaking of the department, then of course there is a zoning ordinance which we enforce, which of course covers a great deal more of ground than just safety.
“Q. Now, in the case of the Healy marquee, it was and is your opinion that there is no connection between the maintenance of that marquee with safety?
“A. Well, I am not familiar with the physical condition of the marquee itself. I am assuming that it is reasonably safe, but I will say that any marquee or any sign may be made absolutely safe.
“Q. As a matter of fact, you know, do you not—
“The Court: Pardon me. You mean safe from falling, or what?
“The Witness: So that it would not be hazardous, falling, or any part of it falling down.
“The Court: Well, that does not apply to whether or not you could conveniently get at the building with fire ladders, or anything of that kind?
“The Witness: That is another matter, sir.
“Q. Well, that has to do with public safety, does it not?
“A. Yes, from the fire-fighting point of view. I can imagine where it might even facilitate fire fighting, as well as it might hinder it. I would say it depends entirely on the circumstances involved.”
On cross-examination:
“Q. Now, one other question: On direct examination Mr. Abbott asked you something about the aesthetics, especially as it pertained to streets in the city of Detroit. What is your opinion as to the appearance of Woodward avenue, the appearance of the parts of Woodward avenue from which signs and marquees have been removed, or do not exist, or which exist in compliance with the ordinance, as compared with the portion of Woodward avenue where signs and marquees exist in violation of the ordinance? * * *
“A. My personal opinion, or an opinion given in my official capacity?
“Q. Do you care to give any such opinion? If you do not, say so.
“A. Personally, I would not mind saying that of course I have seen cities and streets that were devoid of signs and other obstructions and encroachments, and in my opinion I think that the architectural beauty of buildings is considerably enhanced. However, officially I have no right to render such an opinion.”
It is a proper inference that a profusion of lights on such a street as Woodward avenue in Detroit may tend to a confusion of both pedestrians and drivers of motor vehicles in the nighttime. Furthermore, signs projecting over sidewalks may under some circumstances be considered a public nuisance and a menace to public safety. Hass v. Booth, 182 Mich. 173.
In support of their position that the ordinance here attacked is void if based solely on aesthetic considerations, appellants rely on City of Youngstown v. Kahn Brothers Building Co., 112 Ohio St. 654 (148 N. E. 842, 43 A. L. R. 662), which is a case involving a zoning ordinance and the erection of an apartment house on private property; on City of Chicago v. The Gunning System, 214 Ill. 628 (73 N. E. 1035, 70 L. R. A. 230, 2 Ann. Cas. 892), and Wolverine Sign Works v. City of Bloomfield Hills, 279 Mich. 205, both'involving ordinances pertaining to the erection of billboards on private property. None of these cases involves the constitutional and statutory powers of a home-rule city over the use, regulation, improvement and control of its streets and of the space above and beneath their surface. They are not controlling here. Nor do we need to follow earlier cases involving restrictions on the power of cities, antedating the home rule amendment to the Constitution and legislation to effectuate its intent. The home rule act should be con-strued “liberally and in a home-rule spirit.” City Commission of Jackson v. Hirschman, 253 Mich. 596, 599.
“Under the home-rule act cities have a general grant of rights and powers, subject only to certain enumerated restrictions, instead of former method of having only enumerated rights and powers definitely specified (1 Comp. Laws 1929, §2228 et seq.).
city with a home-rule charter may enact and put into its charter any provisions limited to purely municipal government that it may deem proper so long as they do not run contrary to the Constitution or to any general statute.” City of Pontiac v. Ducharme (syllabi), 278 Mich. 474.
“Justification of the ordinance is predicated upon the so-called police power of government. The sovereign power of the State includes protection of the safety, healthy morals, prosperity, comfort, convenience and1 welfare of the public, or any substantial part of the public. * * *
“With regard to the presumption of constitutionality, the rule applicable to ordinances of a city government is the same as that applied to statutes passed by the legislature. Goldstein v. City of Hamtramck, 227 Mich. 263; 43 C. J. p. 569. A statute will be presumed to be constitutional by the courts unless the contrary clearly appears; and in case of doubt every possible presumption not clearly inconsistent with the language and the subject matter is to be made in favor of the constitutionality of legislation. Scott v. Smart’s Executors, 1 Mich. 295; Sears v. Cottrell, 5 Mich. 251; Thompson v. Auditor General, 261 Mich. 624. Every reasonable presumption or intendment must be indulged in favor of the validity of an act, and it is only when invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the Constitution that a court will refuse to sustain its validity. A statute is presumed to be constitutional and it will not be declared unconstitutional unless clearly so, or so beyond a reasonable doubt. * # *
“Ordinances having for their purpose regulated municipal development, the security of home life, the preservation of a favorable environment in which to rear children, the protection of morals and health, the safeguarding of the economic structure upon which the public good depends, the stabilization of the use and value of property, the attraction of a desirable citizenship and fostering its permanency are within the proper ambit of the police power. Changes in such regulations must be sought through the ballot or the legislative branch.” Cady v. City of Detroit, 289 Mich. 499, 504, 505, 514.
“In most of the States of the Union the municipalities possess only such power as is delegated to them by the legislature and delegated by express terms. This was true here before the Constitution of 1909 [1908?]. But the people by that instrument (art. 8, § 28) took from the legislature certain of its former powers over municipalities and reserved to them reasonable control over their streets in the following language:
“ ‘The right of all cities, villages and townships to the reasonable control of their streets, alleys and public places is hereby reserved to such cities, villages and townships.’
“This is an expansion of the powers of municipalities rather than in derogation of them (People v. McGraw, 184 Mich. 233), and renders applicable the decisions of other States where the municipalities possess less power than here. * * *
“The legislative department of the city of Detroit has determined that this ordinance is for the public welfare, for the public good. Courts of last resort are daily enforcing police regulations that no member of the court would1 vote for if they were sitting as legislators. But sitting as members of the court they determine not the policy of the regulation but the two questions: (1) Has the municipality the power to enact the regulation? (2) Has such power been so arbitrarily and capriciously exercised as to make the regulation unreasonable and deprive the complaining party of their constitutional rights ? With due regard to our function in the case, I think we should declare the ordinance before us valid as against the objections urged.” Red Star Motor Drivers’ Ass’n v. City of Detroit, 234 Mich. 398, 407, 418, 419.
In 1905, at a time when municipalities in this State possessed less power than they now possess under the home rule amendment and subsequent legislation, one Mrs. Forbes was the owner of a building at the junction of Lafayette and Michigan avenues in Detroit. The walls of the building were built upon the street line. Mrs. Forbes sought, and procured from the common council, permission to extend show windows or bay windows over the sidewalks. She proceeded to build the bay windows extending into the street, but before their completion the city revoked the permit and directed the removal of the encroachments. This court (Forbes v. City of Detroit, 139 Mich. 280) affirmed a decree upholding the abating of the so-called nuisance, and the requirement to remove the windows. We said (p. 283):
“There is a manifest propriety in denying the privilege of encroachment upon streets. While Mrs. Forbes is a sufferer without apparent fault upon her part, we see no way of relieving her.”
In the case at bar appellants concede that the permits on which the encroachments in question were erected were revocable at will by the common council. We see no merit in the claim by appellant 1426 Woodward Avenue Corporation that its permit was not revoked. If in no other manner, the adoption of the ordinance amendment was a sufficient revocation of the permit, under the circumstances of its adoption. The circuit judge considered that the special permit provision in section 4 of ordinance No. 298-C was invalid. Judge Keidan granted a temporary injunction on that assumption, following which the common council by amendment to said section 4, effective October 23, 1941, eliminated this objectionable proviso. We entertain no doubt in saying that the permit of this appellant, revocable at the will of the city, has been revoked by the common council.
In Roberts v. City of Detroit, 241 Mich. 71, the court held that under the home-rule amendment the powers possessed under the previous charter of the city of Detroit were carried over into the new. The previous charter of Detroit (1904), § 175, p. 115, provided:
‘ ‘ The common council shall have power to survey, ascertain and establish the boundaries of all highways, streets, avenues, lanes, alleys, public parks, squares and spaces in said city. * # * To prohibit and remove all encroachments upon and obstructions in the same by buildings, fences or in any manner.”
Appellants make no claim that the signs and marquees here in question do not constitute encroachments on the public street.
Aside from any aesthetic reason for requiring the removal of signs and the regulation of marquees encroaching on and over a street, municipal authori ties have full power to control such encroachments which obstruct light, air, view, rainfall or complete use of the street. Fuller v. City of Grand Rapids, 105 Mich. 529; Weber v. City of Detroit, 159 Mich. 14 (36 L. R. A. [N. S.] 1056); Ann Arbor Lodge No. 325, Benevolent and Protective Order of Elks v. City of Ann Arbor, 242 Mich. 340; Long v. Railroad Co., 248 Mich. 437; 4 McQuillin, Municipal Corporations (2d Ed.), §1453 (1349), p. 142; McQuillin, Municipal Corporations (2d Ed.), Rev. Vol. 3, § 984 (927), p. 242; 3 Dillon, Municipal Corporations (5th Ed.), §1186; 37 Am. Jur. §313, p. 969.
Appellants argue that the ordinance effective October 23, 1941, is invalid because it purports to prohibit or regulate only signs and marquees on Woodward avenue while failing to prohibit similar encroachments in other business or congested areas. As early as 1934 the common council enacted ordinances regulating the erection of signs and marquees projecting into the street along certain portions of Woodward avenue, and by subsequent amendments the ordinances now cover the length of Woodward avenue from Grand boulevard to the river. The fact that there are other congested business streets running into or paralleling Woodward avenue where signs and marquees similar to their own are not prohibited does not necessarily make the ordinance invalid. Woodward avenue is the leading business street of Detroit. Whether signs on Washington boulevard or Adams avenue should at the same time be similarly regulated is an administrative or legislative question for the common council. We are not prepared to hold that it is within the province of this court to dictate to a home-rule city what streets the city legislative authority shall include or exclude in prohibiting signs or in regulating marquees which project into the streets. We do not hold that sneh ordinances must be city-wide, nor decide the extent to which they must be limited. In the instant case, admittedly Woodward avenue is the principal business thoroughfare of the largest city in Michigan. It is a wide street with multiple two-way traffic, with streetcar tracks and passenger platforms in the center. Modern automotive traffic is therein regulated by traffic lights. Conceivably it is in the interest of public safety that other lighted signs and marquees encroaching on the street be prohibited. Assuming that the ordinance applies only to futurq installations of marquees, that does not establish whether the common council may, or may not, enact similar legislation in the future when or if considered necessary, as to existing marquees, or as to other streets. Appellants argue that the ordinances are void because discriminating in effect. It doubtless can be said that all legislation is in some way discriminatory because it does not apply equally to all persons, all places and all situations alike. -This is not sufficient reason for holding the ordinance void, under the circumstances of the case.
We conclude that the amendment to the ordinances under consideration was not unreasonable, does not infringe upon the constitutional limitation that the control of its streets by a municipality must be a reasonable control, and that it is a valid ordinance as against the objections raised. Other provisions in the decree are not before us. The decree is affirmed, but without costs, a question of a public nature being involved.
Starr, C. J., and North, Bittzel, Bushnell, Sharpe, and Reid, JJ., concurred. The late Justice Wiest took no part in this decision.
This is Stat. Aim. § 5.2071 et seq.—Repoeteb. | [
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Per Curiam.
Amex Assurance Company (Amex) appeals as of right the trial court’s order granting Geico Indemnity Company’s motion for summary disposition and denying Amex’s cross-motion for summary disposition. Plaintiff cross-appeals from the trial court’s order denying his motion for case evaluation sanctions against Amex and for attorney fees pursuant to the no-fault act. We affirm in part, reverse in part, and remand for entry of a judgment in plaintiffs favor inclusive of case evaluation sanctions.
This matter arises out of an automobile-motorcycle accident in which the motorcycle operator, plaintiff, incurred serious injuries. The automobile involved in the accident was covered by an insurance policy issued in the state of Washington by Amex. While plaintiff did not have a no-fault insurance policy, his parents, with whom he resided, had such a policy issued by defendant Geico Indemnity Company (Geico). When both insurers failed or refused to pay personal protection insurance (PIP) benefits to plaintiff, he initiated this action. Shortly after this action commenced, Geico moved for summary disposition on the basis that Amex was the insurer first in priority for purposes of PIP benefits payable to or on behalf of plaintiff. Amex also moved for summary disposition, arguing that Geico was the first priority insurer. The trial court agreed with Geico and granted its motion for summary disposition, while denying Amex’s cross-motion. This Court denied Amex’s application for leave to appeal and the matter proceeded to trial against Amex. A judgment was ultimately entered in favor of plaintiff and against Amex in the amount of $326,895.01. Plaintiff thereafter sought case evaluation sanctions and attorney fees, both of which the court declined to award. These appeals followed.
I. STANDING TO APPEAL
At the outset, we note that plaintiff and Geico challenge Amex’s standing to pursue an appeal, arguing that, absent a cross-claim against Geico, Amex has no right to appeal the summary disposition ruling in Geico’s favor. We disagree.
Pursuant to MCR 7.203(A), this Court “has jurisdiction of an appeal of right filed by an aggrieved party.” The term “aggrieved party” is defined, for purposes of MCR 7.203, as one who is not merely disappointed over a certain result, but one who has “suffered a concrete and particularized injury. ... [A] litigant on appeal must demonstrate an injury arising from either the actions of the trial court or the appellate court judgment rather than an injury arising from the underlying facts of the case.” Federated Ins Co v Oakland Co Rd Comm, 475 Mich 286, 291-292, 715 NW2d 846 (2006).
On appeal, Amex’s sole argument is that the trial court erred in interpreting and applying of MCL 500.3163. The lower court’s ruling regarding this statute served as the basis for the determination that Amex was liable for PIP benefits payable to, or on behalf of, plaintiff and for granting Geico’s motion for summary disposition and denying Amex’s cross-motion for summary disposition. Because Amex’s pecuniary interest has been directly affected by the summary disposition order and Amex has suffered a particularized “injury,” it is an “aggrieved party” with respect to the trial court’s summary disposition ruling. Amex has standing to challenge that ruling on appeal.
II. STANDARD OF REVIEW
We review a trial court’s decision regarding a motion for summary disposition de novo. Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). A motion brought under MCR 2.116(C)(10) tests the factual support for the claim. Id. When reviewing a motion for summary disposition brought under MCR 2.116(C)(10), the Court must examine the documentary evidence presented below and, drawing all reasonable inferences in favor of the nonmoving party, determine whether a genuine issue of material fact exists. Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314 (1996). Summary disposition may be granted under MCR 2.116(0(10) when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). We review issues of statutory interpretation de novo. Fisher v Fisher, 276 Mich App 424, 427; 741 NW2d 68 (2007).
III. COVERAGE BY A NONRESIDENT’S OUT-OF-STATE INSURANCE POLICY FOR INJURIES TO A MICHIGAN RESIDENT
Amex contends that the trial court erred by ruling that MCL 500.3163 was applicable to the instant matter and by relying on the statute to grant summary disposition in Geico’s favor on the issue of priority. We disagree.
The primary goal of statutory interpretation is to ascertain and give effect to the intent of the Legislature in enacting a provision. Liberty Mut Ins Co v Michigan Catastrophic Claims Ass’n, 248 Mich App 35, 45; 638 NW2d 155 (2001). The first criterion in determining intent is the language of the statute. If the statutory language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. Id. However, if reasonable minds can differ regarding the meaning of a statute, judicial construction is appropriate. Id. Only if the language is ambiguous do we look to other factors in attempting to ascertain the purpose behind the legislation. A liberal construction in favor of the public and the policyholders is preferred when the statute involved is an insurance law. Michigan Life Ins Co v Comm’r of Ins, 120 Mich App 552, 558; 328 NW2d 82 (1982).
MCL 500.3163 provides:
(1) An insurer authorized to transact automobile liability insurance and personal and property protection insurance in this state shall file and maintain a written certification that any accidental bodily injury or property damage occurring in this state arising from the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle by an out-of-state resident who is insured under its automobile liability insurance policies, is subject to the personal and property protection insurance system under this act.
(2) A nonadmitted insurer may voluntarily file the certification described in subsection (1).
(3) Except as otherwise provided in subsection (4), if a certification filed under subsection (1) or (2) applies to accidental bodily injury or property damage, the insurer and its insureds with respect to that injury or damage have the rights and immunities under this act for personal and property protection insureds, and claimants have the rights and benefits of personal and property protection insurance claimants, including the right to receive benefits from the electing insurer as if it were an insurer of personal and property protection insurance applicable to the accidental bodily injury or property damage.
(4) If an insurer of an out-of-state resident is required to provide benefits under subsections (1) to (3) to that out-of-state resident for accidental bodily injury for an accident in which the out-of-state resident was not an occupant of a motor vehicle registered in this state, the insurer is only liable for the amount of ultimate loss sustained up to $500,000.00. Benefits under this subsection are not recoverable to the extent that benefits covering the same loss are available from other sources, regardless of the nature or number of benefit sources available and regardless of the nature or form of the benefits.
As noted by our Court in Kriko v Allstate Ins Co of Canada, 137 Mich App 528, 532; 357 NW2d 882 (1984), there are at least two benefits that an out-of-state insurance company receives by filing and maintaining on file a § 3163 certificate, even though it does not write any motor vehicle insurance policies in this state. First, the out-of-state insurance company makes its insurance policies more attractive to potential customers who might be regular travelers in the state of Michigan. Second, the out-of-state insurer may avail itself of the potential benefits provided by Michigan’s no-fault system by filing its certification. There is no dispute that Amex filed the § 3163 certificate in the instant matter, thus subjecting itself to, and availing itself of, Michigan’s no-fault system. The issue is whether, as Geico contends (and plaintiff concurs), MCL 500.3163 places Amex in the priority position for purposes of PIP benefits to a Michigan resident who was injured in an accident involving an out-of state vehicle insured by out-of state insurer Amex. We hold that it does.
Michigan cases addressing the application of MCL 500.3163 generally involve situations where a nonresident, insured by an out-of state insurer who has filed the certification set forth in MCL 500.3163(1), is seeking benefits from that out-of-state insurer for injuries that occurred in a Michigan automobile accident. These cases initially appear to support an argument that the statute imposes liability for benefits on an out-of-state insurer only where its own insured suffers injuries. In Transport Ins Co v Home Ins Co, 134 Mich App 645, 651; 352 NW2d 701 (1984), for example, a panel of our Court determined that the only conditions for an insurer’s liability under § 3163 are: (1) certification of the carrier in Michigan, (2) existence of an automobile liability policy between the nonresident and the certified carrier, and (3) a sufficient causal relationship between the nonresident’s injuries and his or her ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle. Transport Ins Co appears to indicate liability only attaches to an out-of-state insurer with respect to injuries incurred by an out-of-state resident. Later Michigan cases involving § 3163 have employed this same standard. Liberty Mut Ins Co v Michigan Catastrophic Claims Ass’n, 248 Mich App 35, 40; 638 NW2d 155 (2001), for example, noted that “[u]nder MCL § 500.3163(1), insurers authorized to transact PIP insurance in Michigan are required to pay Michigan PIP benefits to their out-of-state resident insureds in the event of a motor vehicle accident occurring in Michigan.” See, also, Goldstein v Progressive Casualty Ins Co, 218 Mich App 105, 110; 553 NW2d 353 (1996) (“the apparent intent of § 3163 ... is to guarantee that insured nonresidents injured in Michigan are protected against economic losses to the same extent as Michigan residents”). None of these cases, however, involved or addressed the very narrow issue presented to this Court — whether no-fault benefits are payable by an out-of-state insurer to, or on behalf of, a Michigan resident injured in an accident resulting from its nonresident insured’s ownership of a motor vehicle. The above cases provide little guidance.
The explicit language of MCL 500.3163 provides that an insurer may file a certification that any accidental bodily injury or property damage occurring in Michigan and arising from the ownership of a motor vehicle by an out-of-state resident who is insured under its automobile liability insurance policies is subject to the personal and property protection insurance system under the Michigan no-fault act. There is no language limiting an out-of-state insurer’s liability only to situations where the accidental bodily injury is sustained by its insured, nor is there any restriction on the application of the no-fault act. Instead, the above language unequivocally subjects the out-of-state insurer to the entire Michigan personal and property insurance system when any accidental bodily injury arising from an out-of-state insured’s ownership or use of a motor vehicle occurs.
MCL 500.3163(3) also explicitly provides that if the certification applies to accidental bodily injury or prop erty damage, not only do the insurer and its insureds have the rights and immunities under the no-fault act for personal and property protection, claimants have the rights and benefits of personal and property protection insurance claimants, “including the right to receive benefits from the electing insurer as if it were an insurer of personal and property protection insurance applicable to the accidental bodily injury or property damage.” By including such language, the Legislature clearly contemplated that persons other than an out-of-state insurer’s insureds may have a right to recover benefits from the out-of state insurer. The language in MCL 500.3163 being clear and unambiguous, judicial construction is neither required nor permitted, and we must apply the statute as written. Liberty Mut Ins Co, supra. In doing so, we conclude that the trial court properly determined that MCL 500.3163 applies.
Because Amex filed a § 3163 certificate, it agreed to be governed by the Michigan no-fault act when an accident involving its insured’s vehicle occurred in Michigan, and we look to MCL 500.3114 to determine the order of priority for payment of no-fault benefits. MCL 500.3114(5) provides:
(5) A person suffering accidental bodily injury arising from a motor vehicle accident which shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle shall claim personal protection insurance benefits from insurers in the following order of priority:
(a) The insurer of the owner or registrant of the motor vehicle involved in the accident.
(b) The insurer of the operator of the motor vehicle involved in the accident.
(c) The motor vehicle insurer of the operator of the motorcycle involved in the accident.
(d) The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident.
Applying the above to the facts at hand, Amex, being the insurer of the owner of the motor vehicle involved in the accident, is the priority insurer for purposes of no-fault benefits payable to, or on behalf of, plaintiff. The trial court therefore did not err in its summary disposition ruling. We next turn to plaintiffs cross appeal, beginning with his claim of entitlement to case evaluation sanctions.
IV CASE EVALUATION SANCTIONS
A trial court’s decision whether to grant case evaluation sanctions presents a question of law, which this Court reviews de novo. Smith v Khouri, 481 Mich 519, 526; 751 NW2d 472 (2008). Case evaluation sanctions are provided for at MCR 2.403(0) “(1) If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party’s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. ...” The use of the word “must” indicates that the imposition of these sanctions is mandatory. Allard v State Farm Ins Co, 271 Mich App 394, 398-399; 722 NW2d 268 (2006). The purpose of case evaluation sanctions is to shift the financial burden of trial onto the party who demands a trial by rejecting a proposed case evaluation award. Id.
Here, it is undisputed that the case evaluation award was $190,000 in favor of plaintiff and against Amex. It is also undisputed that plaintiff accepted and Amex rejected the award. The matter then proceeded to trial. The only issue presented to the jury, though, was whether plaintiff owned the motorcycle at the time of the accident (he not being entitled to PIP benefits if he was the owner of an uninsured motorcycle). The parties stipulated the amount of damages in the event that the jury found that plaintiff was not the owner of the motorcycle. The jury found that plaintiff was not the owner, and while Amex does not dispute that the damages award was more favorable to plaintiff ($296,503.47, adjusted pursuant to MCR 2.403[O][3] to $326,895.01), it nevertheless asserts that plaintiff was not entitled to case evaluation sanctions. According to Amex, because the parties stipulated the amount of damages, the jury did not render a “verdict” as contemplated by MCR 2.403(0) and plaintiff is precluded from seeking case evaluation sanctions. We disagree.
MCR 2.403(0X2) provides:
For the purpose of this rule “verdict” includes,
(a) a jury verdict,
(b) a judgment by the court after a nonjury trial,
(c) a judgment entered as a result of a ruling on a motion after rejection of the case evaluation
While the jury in this matter did not determine the precise amount of the damages in light of the parties’ stipulation, the jury’s determination that plaintiff was not the owner of the motorcycle and thus entitled to PIP benefits necessarily led to the entry of a judgment incorporating the stipulated damages award. The parties both understood, when making their damages stipulation, that if the jury found that plaintiff was entitled to PIP benefits, a judgment would enter in the amount agreed upon by the parties. The jury verdict, then, was essentially that plaintiff was entitled to PIP benefits in the amount agreed upon by the parties. That the actual amount does not appear on the jury verdict form does not make it any less a part of the verdict. Moreover, MCR 2.403(O)(2) provides that “verdict” includes those items listed in subsections a through c. Nothing in the rule indicates that a verdict is limited to only those items.
The verdict in this matter was indisputably more favorable to plaintiff, as defined in MCR 2.403(3), than the case evaluation. There are only three narrow exceptions to the mandatory imposition of case evaluation sanctions. Great Lakes Gas Transmission Ltd Partnership v Markel, 226 Mich App 127, 130; 573 NW2d 61 (1997). First, the trial court may decline to award costs in a case involving equitable relief when the verdict is more favorable to the rejecting party than the evaluation award. Id. The second exception applies only to dramshop actions. Third, the trial court “may, in the interest of justice, refuse to award costs” when the judgment is “entered as a result of a ruling on a motion after the party rejected the [case] evaluation” under MCR 2.403(O)(2)(c). Id. Because this case does not fall within any of the exceptions provided in the plain language of the court rule, the trial court was required to award case evaluation sanctions to plaintiff.
The trial court, however, was not required to award plaintiff his requested attorney fees. Plaintiff sought attorney fees pursuant to MCL 500.3148:
(1) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.
The trial court’s decision about whether the insurer acted reasonably involves a mixed question of law and fact. Ross v Auto Club Group, 481 Mich 1, 7; 748 NW2d 552 (2008). What constitutes reasonableness is a question of law, but whether the defendant’s denial of benefits is reasonable under the particular facts of the case is a question of fact. Id. Questions of law are reviewed de novo; a trial court’s findings of fact are reviewed for clear error. Id.
In declining to award attorney fees, the trial court stated, in part:
... I can’t give you what you request because, first of all, this whole ownership issue is on appeal constantly, and the Court of Appeals needs to resolve it and they haven’t.... And until they resolve it, it’s hard to accuse any insurance company of being frivolous because they’re trying to get out from responsibility for something when they don’t know who the owner is. And, secondly, I really kind of locked myself in when I denied that summary disposition motion that they brought because when I said it was a factual dispute ... if I rule those ways, then I can’t accuse them of being frivolous in their defense of the case.
Plaintiff places undue emphasis on the court’s use of the word “frivolous,” in making its ruling, contending that the trial court employed the wrong standard in determining the issue of attorney fees. It can be gleaned from its reasoning, however, that the trial court essentially determined that Amex’s initial refusal of PIP benefits was not unreasonable. The trial court indicated that the issue for trial, ownership, is still often subject to dispute and not entirely resolved by this Court, and that it had previously concluded that a factual dispute about ownership existed in this matter. Moreover, as addressed elsewhere in this opinion, whether MCL 500.3163 applied to the specific factual situation presented in this case had not previously been considered by this Court. Given the above, we, like the trial court, cannot conclude that Amex unreasonably refused to pay PIP benefits and we therefore cannot conclude that the trial court erred in declining to award attorney fees.
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North, C. J.
The original bill of complaint in this cause was filed April 23, 1942, by Mary Dzieciniak. Two of her three adult children, Joan Drinski and Ulick Drinski, were made defendants. The relief sought was cancellation of certain deeds and of the transfer of all of plaintiff’s personal property, including money in the bank, to the daughter Joan Drinski, with the provision that within six years after plaintiff’s death Joan would pay to plaintiff’s son Ulick $500. Simultaneously with the property transfer a contract was entered into between Joan and her mother whereby the former agreed to “care for, maintain and support” her mother as long as she should live, pay all of her expenses both in ill ness and in health, pay the expenses of burial and the $500 above noted to Ulick. The ground upon which relief was sought was that plaintiff, a Polish woman whose knowledge of the English language was very limited, was fraudulently misled by her daughter to believe that the transfer of plaintiff’s property was only testamentary in character—not an absolute transfer of title to Joan. The'daughter answered denying the material allegations of the bill; but before the case was brought on for hearing the plaintiff died on July 8, 1942. On December 4, 1942, an amended bill of complaint was filed by de.cedent’s other daughter, Marjorie Drinski, and John B. Hadden, administrator of the estate of Mary Dzieciniak, deceased. In this amended bill of complaint Joan Drinski and Ulick Drinski were made defendants. The same relief was asked as in the original bill of complaint, but primarily on the ground that at the time the mother transferred her property to Joan the former was mentally incompetent. This allegation is in the following words:
“That on said 23d day of December, A. D., 1941 (the date of the transfers to Joan Drinski), the said Mary Dzieciniak was mentally sick and disordered, and was mentally incapable of understanding or comprehending the nature of her acts, and was incapable of making a contract, or executing a deed, bill of sale or similar instrument, and was in fact non compos mentis.”
Plaintiffs also alleged that J oan. failed to perform her contract to care for her mother. The case was brought to issue by the answer of J oan and the default for nonappearance of Ulick. After full hearing the circuit judge found as follows:
‘ ‘ The bill of complaint is dismissed because plaintiffs have not proved that Mary Dzieciniak was mentally incompetent when she executed deed (deeds), bill of sale, and agreement, or that defendant Joan Drinski failed to carry out the terms of the contract for support.”
From the decree dismissing the bill of complaint plaintiffs have appealed. We deem a complete and detailed recital of all the facts disclosed by the testimony unnecessary to decision herein, but we note the following.
At the time of the transfer of her property to the daughter Joan, Mary Dzieciniak was 55 years of age. She was a Polish woman with very limited knowledge of English, which she could neither read nor write. She lived in Cass county on a 50-acre farm which she operated, having been divorced from her former husband who was also living on a farm in the same vicinity. She was a frugal, hardworking woman, quite capable in business matters, and had become possessed of not only the farm and the usual personal property in connection therewith, but she also was the owner of a six-family flat in Gary, Indiana, and the possessor of bank deposits. While the testimony is not very definite, it is stated that the total value of all of her property was approximately $15,000. It was this property that the mother transferred to her daughter Joan on December 23, 1941.
At the time of the transfer the unmarried daughter, Joan, then 31 years of age, was living with her mother on the farm. Neither the son Ulick, who was 34 years of age, nor the other unmarried adult daughter Marjorie, resided with the mother. Joan had attended school until she finished the 7th or 8th grade, but when about 17 years of age she began working at Niles. Fpr a time she drove back and forth with neighbors to her employment, but finally stayed at Niles for about 5 years. Then in 1939 she returned to the farm and continued to reside there with her mother until some time after the conveyance of the property to her.
The circumstances immediately surrounding the transfer of the mother’s property to Joan were as follows. On the date above noted, Mrs. Dzieciniak, in company with a neighbor, Frank Majieski, the daughter Joan and Walter Putek who described himself as Joan’s boy friend, went to an attorney in Cassopolis who as scrivener prepared the instruments involved in this litigation. The attorney, who did not understand Polish, seems to have obtained his information as to what Mrs. Dzieciniak desired, at least in part, from those who accompanied her. However the attorney did testify that:
“I went further than I otherwise would, probably, in attempting to be sure that Mrs. Dzieciniak knew exactly what she was signing. Of course I don’t remember what I said but'I did tell her in effect this: That this was—that these were deeds and that she was disposing of her property—giving it away—so she would not have it any more. * * * She said that’s what she wanted to do—give it to Joan. * * * These documents were interpreted by Mr. Majieski. I han’t remember anything about what was said about her daughter Marjorie. I would say at the time, on the 23d day- of December, 1941, that she was and had mental competency to make the instruments in question. ’ ’
After the instruments of transfer had been completed, Mrs. Dzieciniak went to the probate court and obtained possession of a will which she had left there with the seeming purpose of destroying it.
Joan and her mother continued living at the farm home until about April 19 or 20,1942; the exact day is not definitely fixed. There is some testimony that notwithstanding the transfer of all her property to Joan, the mother transacted certain items of business in the same manner as though she were still owner of the property. About the date last above noted, a quarrel, and according to some testimony a physical encounter, occurred between the mother and Joan. This resulted in Joan leaving home and having practically all of the personal property removed from the farm, leaving only a very scanty amount of household furnishings and food for the mother. The latter shortly went to reside for a few days in the home of her former husband, but thereafter she resided with her daughter Marjorie in South Bend, Indiana, until about June 15, 1942. At this time the mother became violently insane. Thereafter' until her death July 8, 1942, she was an institutional inmate and markedly insane.
The mother filed the original bill of complaint above noted promptly following the trouble between her and Joan. The record discloses that formerly there had been an unfriendly relation between Marjorie and her mother, and that prior to 1941 the mother instituted litigation against Marjorie to cancel a deed, and was “very angry.” with Marjorie. There is also testimony that Mrs. Dzieciniak had said that her son Ulick had some shortcomings in that he spent ‘ ‘ all money anyway for drinking, ’ ’ and “if she gave him more that he would spend it.” Ulick, called by plaintiffs under the statute for cross-examination, was one of the five witnesses who testified in behalf of plaintiffs.
A careful review of this record discloses that the testimony of something like 18 witnesses who testi fied in behalf of Joan quite conclusively shows that at the time of the execution of the challenged instruments Mary Dzieciniak was thoroughly competent to transact business and that the disposition that she made of her property to her daughter Joan was one that she had been contemplating for some time. For example the witness Frank Majieski who was a neighbor of Mrs. Dzieciniak and who accompanied her to Cassopolis at the time of the transaction in question testified:
“Well I was taking her a lot of times and she was telling me that she is going to sign up everything for Joan because the other daughter no good—she cheated-her too much. That is what she told me.”
The holding of the circuit judge that at the time of the transfer of the property to Joan her mother was mentally competent is fully supported by the preponderance of the proof. As noted above, it was some considerable time after the challenged transaction that Mrs. Dzieciniak filed in her own right the original bill of complaint herein.
Appellants also urge that cancellation should have been decreed on the ground that Joan failed to perform her contract to support her mother. The trial judge’s finding that plaintiffs did not prove this contention is sustained by the record.
At the trial plaintiffs’ counsel invoked the statute (3 Comp. Laws 1929, §14219 [Stat. Ann. §27.914]) which prohibited Joan from testifying to matters equally within the knowledge of her deceased mother, and in consequence thereof there is scanty competent testimony of the exact facts and circumstances under which the home relations between Joan and her mother were terminated. Some of such facts and circumstances which do appear in the record have been hereinbefore noted. But in ad dition the following seems quite pertinent to this phase of the case. Promptly after the difficulty which resulted in the separation, Mrs. Dzieciniak filed a bill of complaint wherein, among other relief, she sought a temporary injunction against Joan “from in any manner interfering with the sole and exclusive possession of the plaintiff in said premises.” This suit was still pending when Mrs. Dzieciniak died. It is particularly worthy of note that in this suit, the mother made no complaint that Joan had breached the contract for the mother’s support. No relief was sought on that ground. Instead the bill was based wholly upon the mother’s claim that she had been fraudulently led by Joan to believe that the transaction which occurred in Cassopolis was only a testamentary disposition of the mother’s property. There is testimony to the effect that while the mother lived with Joan the latter provided the former with proper maintenance and support. There is also testimony from which the inference may be justly drawn that at the time of the separation Joan was assaulted by her mother; also that following the separation Joan’s mother said “she was going to kill her daughter (Joan).”
Prom our review of the record as a whole, we are convinced that we would not be justified in reversing the circuit judge’s holding that plaintiffs are not entitled to cancellation on the ground that Joan without just cause failed to carry out her contract for the support and maintenance of her mother. The circuit judge saw and heard the respective witnesses, and this afforded an unusual advantage in the instant case because of the highly conflicting character of the testimony of various witnesses and the quite obvious unreliability of certain portions of the testimony.
Appellants made two applications for rehearing. Each of these was denied. In these holdings we find no error for the reasons that counter affidavits were filed which met and materially weakened the affidavits in support of the motions, that for the most part the newly-discovered evidence was merely cumulative, and some of it of such character that with reasonable diligence it could have been and should have been produced at the hearing of the cause.
Appellants also assert error in the decree of the trial court on the ground it was adjudged therein:
“That the conveyances made by Mary Dzieciniak to Joan on December 23, 1941, were valid conveyances, and that Joan had performed her part of-the agreement thereby practically quieting defendant’s (Joan’s) title to the property when the defendant, Joan Drinski, had prayed for no affirmative relief in her answer. ’ ’
The provisions in the decree to the above effect were germane to the issues presénted by plaintiffs ’ amended bill of complaint, and their inclusion in the decree was not error of which plaintiffs may complain.
The decree entered in the circuit court is affirmed, with costs to defendant Joan Drinski.
Starr, Wiest, Butzel, Bushnell, Sharpe, Boyles, and Reid, JJ., concurred.
See 3 Oomp. Laws 1929, §14220 (Stat. Ann. § 27.915).—Re-porter. | [
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Bushnell, J.
Defendants Bommarito, Lacy, Kohn and Weisberg were granted leave to appeal from sentences following their conviction under an information containing 14 counts, based upon conspiracy to violate the gaming law, Act No. 328, §§301-306, 309, 372, Pub. Acts 1931 (Comp. Laws Supp. 1940, §§ 17115-301—17115-306, 17115-309, 17115-372, Stat. Ann. §§28.533-28.538, 28.541, 28.604).
All of the defendants were apprehended in or-near the premises located at 1431 Broadway in the city of Detroit, which was a store where phonograph records were sold by the ‘ ‘ Swingland Record Com pany.” Sergeant O’Brien of the Detroit police department had been observing the premises and had seen Weisberg and Kohn enter the place “carrying a leather zipper bag and a dirty cloth bag like a money bag they use in banks” and had “watched them go directly into the store, through the store and into the back room at the rear of the store” and later leave the place, carrying nothing. Several evenings afterwards he saw these same defendants come out of the premises. He then left and later that evening returned with other officers . and at about 10:40 p. m., he saw Bommarito and Lacy drive up in a car out of which they took a leather bag, through the store and into the back room. He entered the open store and knocked on the door of the back room.. When asked who was there, he mumbled “It is Eddie.” The door was opened and he saw Bommarito emptying the contents of the' bag upon a table where he observed a quantity of money and various gambling paraphernalia which he knew, from his experience as a police officer, was used in the policy, numbers and mutuel business. He placed Bommarito and Lacy under arrest and confiscated the money and gambling property. As he was leaving the premises with Bommarito and Lacy, he saw Kohn and Weisberg standing in front of the store, arrested them for investigatioii of conspiracy to violate the gambling law and, upon search, found other gambling paraphernalia in their possession. In the back room of the premises were two locked safes. Sergeant O’Brien obtained a search warrant for them and, upon opening the safes, they were found to contain gambling paraphernalia and over $7,000 in money.
Before the jury was sworn defendants filed a motion to quash all counts in the information except one on the grounds of duplicity and misjoinder of counts, and to suppress the evidence claimed to have been unlawfully seized, both of which motions were denied. The jury found each of the defendants, guilty on all of the 14 counts in the information.
Reversal is sought because of the court’s failure to quash all but one count in the information, failure to suppress the evidence, error in the admission of prior convictions of Bommarito, Weisberg and Kohn, error in the admission of evidence of the activities of the so-called “Michigan Mutual Distributing Company,” not a party defendant and not controlled or operated by any of the defendants, and because the evidence does not support a general verdict of guilty on all 14 counts.
In support of the claim of misjoinder in the information, appellants cite authorities which have to do generally with joinder of distinct and separate offenses where the elements of proof are not the same. There is no question but that the doctrine is well settled that a person should not be subjected to trial for two separate and distinct offenses at one time. People v. Rohrer, 100 Mich. 126. But it is also well settled that the people cannot be required to elect between counts where the offenses charged arose out of the same acts at the same time and the same testimony must be relied upon for conviction. People v. Warner, 201 Mich. 547. See, also, People v. Marks, 255 Mich. 271. The various sections of the penal code pertaining to gambling, under which the information is laid, may cover separate offenses, but we are not here concerned with separate offenses, as such, but rather with the identical charge in each count that defendants conspired and agreed together to violate each designated1 section of the penal code. By detailing each of the conspiracies separately, conviction might properly follow on any one or all of the counts and yet result only in the conviction of the crime of conspiracy.
It is contended that evidence seized on the premises at the time of the arrests and that taken from the person of Kohn and from Weisberg’s c'ar at the time of their arrests should be suppressed on the ground that the arrests were illegal. It is true that the arrests were made without a warrant but any peace officer may arrest without a warrant “when he has reasonable cause to believe that a felony has been committed and reasonable cause to believe that such person has committed it.” 3 Comp. Laws 1929, § 17149, as amended1 by Act No. 84, Pub. Acts 1935 (Comp. Laws Supp. 1940, § 17149, Stat. Ann. §28.874). The officer entered the open store and was admitted peaceably to the back room. There he saw gambling paraphernalia in the illegal possession of Bommarito and Lacy. This created a reasonable and honest belief that a felony had been committed, viz., a conspiracy to violate the gambling law. Their arrest without a warrant was justified and the seizure of the illegal property was proper and, as such, was admissible against all of the conspirators. People v. Harter, 244 Mich. 346. The same reasoning applies to the illegal property found on the person of Kohn and in the car of Weisberg after their arrest, because their presence on the premises at another time under suspicious circumstances and their presence nearby at the time of arrest of Bommarito and Lacy justified the arresting officer in suspecting them of connection with the conspiracy.
Appellants also urge that the court erred in admitting evidence as to prior convictions. • The-general rule is that such testimony is inadmissible to establish the guilt of defendants as to other distinct and independent crimes, bnt such testimony is admissible to establish intent. 3 Comp. Laws 1929, §17320 (Stat. Ann. §28.1050), and authorities cited in People v. Hopper, 274 Mich. 418. Nor was the admission of exhibits used in previous convictions erroneous as showing intent.
There was testimony tending to establish connection between the “Swing-land Record Company” and the Michigan Mutual Distributing Company and, therefore, testimony regarding the activities of the latter was properly received.
The record contains sufficient evidence to sustain a verdict of guilty on all 14 counts.
The several judgments are affirmed.
North, C. J., and Starr, Wiest, Butzel, Sharpe, Boyles, and Reid, JJ., concurred1. | [
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Carr, C. J.
Plaintiff brought suit in the circuit court for the specific performance of a verbal agreement for the conveyance of an 80-acre farm in Ottawa county, claimed to have been made between plaintiff and his stepfather, James Thorp. The defendants are the administrator of the estate, and the heirs at law, of Mr. Thorp, who died in June, 1945. Plaintiff’s claims as to the circumstances under which the alleged agreement was made, and the terms and conditions thereof, are set forth in parar graphs 4 and 5 of the bill of complaint as follows:
“4. That in the month of February, 1943, after said Thorp had been hurt and-had come home from the hospital plaintiff made an oral agreement with said Thorp, in the presence of and with the consent of said Mrs. Thorp, for the conveyance and transfer of said 80-acre farm to said plaintiff which agreement is as follows: That said Thorp would give said 80-acre farm to said plaintiff, to take effect upon the death of both he and Mrs. Thorp, if plaintiff would look after said Thorps, wait upon them, take them to town and such other places as they might have need of going, and to ’take care of them, if necessary. That at the death of said Thorp, plaintiff should see that he got a decent burial and place a suitable stone on his grave. That it was part of this, agreement that said Thorp would live on his own income as long as he reasonably could but should the same be insufficient or should he leave any bills for his living expenses at the time of his death, they should be paid by the plaintiff or come out of said 80 acres first and the balance to go to plaintiff. It was part of this agreement that said plaintiff should move on this 80-acre farm as soon as he could and to do so he could repair and improve the buildings and make them livable, and likewise improve the farm, and that plaintiff should pay to the said Thorps so long as either of them should live the sum of $300 a year. That both parties agreed to carry out their part of the agreement in good faith, and each relied upon each other’s honesty and fairness, in carrying out and staying within the reasonable bounds of the agreement. It was further agreed at that time, that the parties should try it out and see how it went, and if said Thorp and plaintiff was satisfied that the agreement would work out, then said Thorp would make out some kind of paper or will by which the title to said 80 acres would pass to said plaintiff after the death of both of said Thorps.
“5. That about a year and a half later the said Thorp informed plaintiff that he (Thorp) thought the agreement would work out and plaintiff thought so too. That said Thorp informed plaintiff that he (Thorp) thought a will would' be the best thing for him to make out so that everybodies’ interest of the parties involved would be protected. That in the meantime said plaintiff had purchased a tractor and tractor tools so that he might work the farm, with the assistance of said Thorp, each owning one-half interest therein. Said tools being more particularly described as: 1 F-12 Forwell Tractor, 1 2-bottom tractor plow; 1 tractor cultivator and 1 three-section drag. That at this time the agreement was slightly changed to the effect that instead of paying $300 a year to the Thorps, he should pay the sum of $200 plus the taxes and insurance and that plaintiff should have said Thorp’s half interest in said tools above mentioned, and that said tools would go with the farm. ’ ’
It fairly appears from the language above quoted that the arrangement claimed by plaintiff was at the outset merely tentative. The parties were to “try it out” and, if mutually satisfied, such arrangement should become operative. The contractual status was dependent on a condition precedent. Weber v. Hall Brothers, 231 Mich. 493; McIsaac v. Hale, 104 Conn. 374 (132 Atl. 916). Had either party not . been satisfied,, the arrangement, as alleged by plain tiff, would have ended without rights or obligations having accrued on either side. Plaintiff alleges, however, that the condition was satisfied, and relies on the theory that a contractual relation was created. The time when the contractual relationship was established must necessarily be taken into 'consideration in determining the issues involved in the case. ,
It is conceded that a verbal contract for the conveyance of real estate is void under the provisions of 3 Comp. Laws 1929, § 13413 (Stat. Ann. § 26.908), which reads in part as follows:
“Every contract for the leasing for a longer period than one year, or for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized in writing. ’ ’ -
Plaintiff, however, relies on 3 Comp. Laws 1929, § 13415 (Stat. Ann. § 26.910), which provides:
• “Nothing in'.this chapter contained shall be construed to abridge the powers of the court of chancery to compel the specific performance of agreements, in cases of part performance of such agreements. ’ ’
On the trial in the circuit court plaintiff offered testimony as to statements made by Mr. Thorp indicating the existence of a contractual relation between himself and plaintiff. In this connection plaintiff’s witness, Edgar R. Hackett, testified as follows:
“Q. Did Mr. Thorp ever tell you of his dealings he had with Daugherty?
“A. Yes, to a certain extent.
“Q. He did. About this 80-acre farm?
“A. Yes.
“He was to pay $300 a year as long as him and his wife lived, and later that was too much so he cut it down to $200. Daugherty was to pay $300 a year first and later it was cut to $200. He .told me this, oh, about -á year ago last spring before the murder.
“Q. Was Daugherty to do anything else, any other conversation? Tell what Daugherty was to do except pay some money.
“A. ' Except improving it all the time.
“Q. I mean by the Thorps. Was there any more about looking after him or taking care of him?
“A. No.
“And for this Daugherty was to get this 80-acre farm, after the death of the two of them, then this 80-acre farm would belong to Daugherty.”
The witness further testified that Mr. Thorp referred to “getting rent money” for plaintiff. He further stated that plaintiff made certain improvements on the farm but disclaimed any knowledge as to who paid for them.
The witness Fred Barnett also testified as to conversations between himself and Mr. Thorp in which the latter stated that there was an agreement between himself and plaintiff whereby plaintiff was to look after Mr. and Mrs. Thorp, .take them places where • they wished to go, pay $200 per year, and have the farm on the death of the survivor of Mr. and Mrs. Thorp. With reference to such payment the witness stated:
“He [Thorp]-said the agreement was that'he was to live there and pay $200 a year as rental for the farm during this time.”
Mrs. Barnett testified, also, as to statements made by Mr. Thorp, consistent with a testamentary intent on the latter’s part to leave the farm to plaintiff.
Plaintiff further claimed that the will referred to in the fifth paragraph of the bill of complaint was accidentally destroyed. There is, however, no showing in the record as to the contents of such will, if made as claimed, The proofs disclose that in April, 1945, Mr. Thorp killed his wife, plaintiff’s mother, and that shortly thereafter he burned some papers. The claim, that the will referred to was thus destroyed, rests on a statement alleged to. have been made by Mr. Thorp, shortly thereafter,. that'he burned the will. Plaintiff also introduced evidence to show that, following the killing of Mrs. Thorp, James Thorp was confined in the county jail where he committed suicide in June, 1945. On May 3d, preceding his death, a deputy sheriff, at Mr. Thorp’s request and direction, prepared a wfill which was signed and witnessed. Therein the farm in question was devised to plaintiff on condition that plaintiff pay the taxes and insurance on the farm, and also pay to Mr. Thorp the sum of $12 per month for the. remainder of his life. The will contained the further stipulations that Mr. Daugherty was to pay the funeral expenses of Mr. Thorp, place a marker on his grave, pay any debts that he might have at the time of his death, and also place a monument, costing not less than $500, on the lot where Mrs. Thorp was buried. The name of plaintiff was subsequently deleted from this will, indicating that Mr. Thorp had, for some reason, changed his mind with reference to the devise of the farm. The paper was offered in evidence, presumably on the theory that it was an admission by Mr. Thorp as to the existence of a contract.
Following the introduction of plaintiff’s proofs on the trial, defendants moyed to dismiss the bill of complaint. The trial coiirt granted the motion, holding that he was unable to determine definitely from the evidence the terms -of the agreement between plaintiff and Mr. Thorp, and that there was insufficient proof of part performance to justify the granting of the relief sought. Prom the decree entered plaintiff has appealed.
The burden of proof was on plaintiff to establish by clear and satisfactory evidence, first, that the contract was made as claimed by him, and, second, that there were such acts of performance on his part, under the contract, as fairly entitled him to the remedy of specific performance. Bame v. Bame, 250 Mich. 515; Hornbeck v. Midwest Realty, Inc., 287 Mich. 230; Eicholtz v. Grunewald, 313 Mich. 666. In support of his claim plaintiff relies on evidence of the admissions made by Mr.- Thorp during his lifetime, with reference to which certain witnesses testified. Commenting on this character of testimony, it was said in Johnson v. Douglas, 281 Mich. 247:
“Testimony of admissions made, or claimed to have been made, in chance or casual conversations is entitled to but little weight. It is "the weakest kind of evidence, Wales v. Newbould, 9 Mich. 45; Wild v. Wild, 266 Mich. 570; Hope v. Detroit Trust Co., 275 Mich. 213; McInerney v. Detroit Trust Co., 279 Mich. 42, and testimony tending to .establish such admissions should be received with caution; and when such admissions are claimed to have been made by one deceased, this caution should deepen into suspicion.”
See, also, King v. Luyckx, 280 Mich. 117.
As pointed out in Kerns v. Kerns, 303 Mich. 23, testimony indicating a testamentary intention cannot be made the basis of a finding of a contractual relation. ' Based on a careful examination of all the testimony in the record we think that the trial court was right in concluding that the proofs offered by plaintiff were insufficient to permit a finding as to the- specific details of the arrangement entered into between plaintiff and James Thorp.
Assuming, for the purposes of discussion, that a contract was made substantially as claimed by plaintiff, the question arises whether the proofs introduced by plaintiff on .the trial show such performance on his part as entitles him to the equitable relief sought. The rule is too well settled to require citation of authority that payment of money is not sufficient-to remove a contract from the operation of the statute of frauds. It is also settled law that acts done prior to the making of a contract cannot be regarded as performance under it. See Dabaman v. Rothman, 291 Mich. 31 (125 A. L. R. 1465); Lapedus v. Weinberg, 292 Mich. 439. In the latter case it was said:
“Acts performed in order to obtain the claimed oral agreement for a lease do not constitute part performance under an oral lease.”
In the case at bar, it appears that plaintiff moved from his former home to the farm in question in the spring of 1943-, while the arrangement was merely tentative. It is. a fair conclusion that part, at least, of thei services rendered by him to Mr. and Mrs. Thorp were performed prior to the summer of 1944. "With reference to the matter of improvements on the farm, it is- apparent that most, if not all, were made before the condition precedent in the arrangement between the parties was performed. It clearly appears that the testimony with reference to the improvements was offered for the purpose of showing reliance by plaintiff on the contract, and not on the theory that they constituted partial performance. In the record we find the following:
“Mr. Post: We don’t claim in the bill of complaint that Mr. Daugherty agreed to make these improvements. We claim that relying—
“The Court: You claim he did make them.
“Mr. Post: We claim he did make them; relying on the fact that he was going to get the farm, he did make them. ’ ’
The evidence does not, show'the details of the services claimed to have been rendered by plaintiff to Mr. and Mrs. Thorp. .Apparently they were of the kind and character that a son may reasonably be expected to perform for his parents. While the will made by Mr. Thorp in May, 1945, referred to the payment of taxes and insurance, and the contract, as set forth in the bill of complaint, made mention thereof, there is no evidence that plaintiff paid either. It is apparent, also, that if the payments made by plaintiff to Mr. Thorp, claimed to have been admitted by the latter in conversations with the witnesses, were by way of rental for the use of the property, thejr may not properly be regarded as partial payment for it. In any event payment of money is not sufficient to obviate the bfir of the statute of frauds. It is conceded that the alleged undertakings of the plaintiff to pay the debts of Mr. Thorp, his funeral expenses, and the cost of the erection of a marker and monument, have not been performed. The evidence relied on in support of the claim of part performance is obviously meager. Moreover, part performance, even if established by competent proof, is not alone sufficient to justify equitable relief in a case of this character. In Lyle v. Munson, 213 Mich. 250, it was said:
“Part performance, while an essential in the test, does not in itself comprehend the whole doctrine of equitable relief in this class of cases. .Misleading, fraudulent conduct by act or acquiescence' is the underlying thought which moves the chancery court under the principle of equitable estoppel tp deny resort to the statute of frauds as an instrument of fraud. The question is not' alone one,of part performance, but as said in Meach v. Perry, 1 Chip. (Vt.) 182 (6 Am. Dec. 719):
“ ‘Does the part performance, with the attending circumstances, make a case of fraud, against which a court of equity ought to relieve? ’ ”
See, also, Harrison v. Eassom, 208 Mich. 685; Policha v. Voss, 292 Mich. 494; Morten v. Zevalkink, 304 Mich. 572.
Applying the principles suggested by these cases, and others of like import, to the facts involved in the case' at bar, the conclusion follows that plaintiff has failed to show such equities in his favor as entitle him to relief by way of specific performance. He has had the use of the farm in question since the spring of 1943. The improvements which he claims he made in reliance on the agreement took place, in the main, while the arrangement was merely tentative; and as before noted there is no specific showing in the record that plaintiff paid for them. Apparently they were of a character that [ended to facilitate his enjoyment of the property as a tenant. Payne v. Jones, 230 Mich. 257; McClellan v. Moore, 272 Mich. 630; White v. Lenawee County Savings Bank, 299 Mich. 109 (136 A. L. R. 259).
On the trial plaintiff undertook to testify that a paper, which he sought to introduce in evidence as containing the substance of the will claimed to have been made by Mr. Thorp in July, 1944, was in Mr. . Thorp’s handwriting. The trial judge, on objection, excluded the testimony as equally within the knowledge of the deceased. Such ruling was obviously based on 3 Comp. Laws 1929, § 14219 (Stat. Ann. §27.914), which reads in part:
“When a suit or proceeding is prosecuted or defended by the heirs, assigns, devisees, legatees, or personal representatives of a deceased person, the opposite party, if examined as a witness in his own behalf, shall not be admitted to testify at all to matters which, if true must have been equally within the knowledge of such deceased person.”
Whether the writing in question contained the substance of the alleged will, and likewise the writing thereof, were matters within the knowledge of James Thorp. The ruling of the trial court was correct. Ripley v. Seligman, 88 Mich. 177.
Plaintiff also undertook to testify as to the improvements that he claimed to have made on the farm in reliance on the contract. This testimony was also properly excluded under the statutory provision, above quoted. Plaintiff’s witness, Edgar B. Hackett, testified that Mr. Thorp went to the farm nearly every day, that he supervised what Daugherty was doing, and helped him. Obviously, the nature and extent of the improvements were within the knowledge of Mr. Thorp.
The decree of the trial court is affirmed, with costs to defendants.
Bcjtzel, Bushneul, Sharpe, Boyues, Beiu, North, and Dethmers, JJ., concurred. | [
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Dethmers, J.
Plaintiffs are employees of the fire department and defendants are the members of the board of civil service commissioners of the city of Muskegon. Plaintiffs filed a bill of complaint for a declaration of rights-under the civil service provisions of the city charter. From a decree for plaintiffs the defendants appeal.
During June and .July, 1945, plaintiffs took promotional civil service examinations and on July 11, 1945, were notified by defendants that they had passed the examinations with certain specific ratings, which placed them on eligible lists immediately below the highest thereon who received promotion. Later additional vacancies occurred, and the plaintiffs contend that so soon as the highest on the eligibile list received promotion the plaintiffs, who rank next on such list, thereupon became next in line for any promotions available within one year after their names first appeared on the eligible list. The defendants disagree and insist that when the person standing highest on the eligible list for promotion immediately following the examinations actually received promotion, the list thereupon became extinguished and the others whose names appeared thereon could only become eligible for promotion by taking further examination and passing with a grade higher than that of any other applicant for promotion taking the same examination.
The applicable charter provisions are contained in chapter 15 thereof.
“Sec. 2 The commission shall classify all the offices of employment; shall make rules for the examination and selection of persons to fill the offices and positions in the classified service; shall supervise the administration of the civil service rules, hold examinations thereunder from time to time, giving due notice thereof, prepare and keep an eligible list of persons passing such examinations, and certifying the names of persons thereon to appointing officers of the several departments. * *
“Seo. 4. From the returns of the examinations held by the commission, it shall prepare an eligible list for each grade or class of position in the competitive classified service of the city. The commission shall strike off the names of candidates from the eligible list after they have remained thereon one year. * * *
“Sec. 5. The head of any department in which a position is to be filled shall notify the commission of that fact and in the event the position is to be filled by promotion from one grade of service to another, then the commission shall certify to the appointing officer the name and address of the person standing highest on the eligible list for promotion, but in the event that the position' to be filled is one for which a vacancy exists, then the commission shall certify to the appointing officer the names and addresses of the three persons standing highest on the eligible list. ’ ’
Defendants maintain that a conflict exists between the provisions of section 4 and section 5 in that section 4 requires the commission to prepare an eligible list of those who pass the examinations and to keep such a list for at least one year for the purpose, as provided in said sections 2 and 5, of certifying names therefrom to appointing officers, while section 5 provides, as to promotions, that only the name of the person standing highest on the eligible list for promotion shall be certified to the appointing officer for such promotion, so that, as defendants say, after the .top person on the list has been promoted the list can serve no further purpose' and must be deemed to have become extinguished automatically, because, to certify thereafter the name or names of those next in order on the list, for promotions later becoming available, would be violative of section 5 inasmuch as those names would not be of the person originally highest on the list but second or possibly third or fourth or fifth. For this reason defendants say that a reading of the two sections together gives rise to an ambiguity calling for construction.
Undertaking such construction, the defendants assert that the requirements of section 4 for the preparation and keeping for a period of one year of an eligible list do not apply to applicants for promotion but only to applicants not already in the service. As to the latter, section 5 provides that the top three on the eligible list shall be certified to fill a vacancy. The defendants’ practice in such cases, after one of the top three receives appointment, has been to move the name of the person originally standing’ fourth on the eligible list to third position, to be certified the next time a vacancy occurs as one of the top three for consideration for appointment, and when one of these three receives an appointment number five moves up to number three position, et cetera. Defendants see no conflict between sections 4 and 5 in this connection despite the fact that their practice results, ultimately, in the certification for appointment to vacancies of persons who originally were not the three highest on the eligible list for vacancies. In doing aa they have in this regard, the defendants are reading section 5, as to filling vacancies, to mean that the names to'be certified are those of the 'three persons standing highest on the eligible list for vacancies at the time such certification is made. We think that is the only way it can be read. The situation in the case of promotions is no different. Promotion of the top person removes his name from the eligible list and thereupon the next in rank becomes the person standing highest on the eligible list for promotion. Not only as relates to the first promotion following examinations therefor, but also as to each subsequent promotion during* the year following the examinations and preparation of the eligible list for promotion, the commission is required to certify for promotion the name of the person then highest on the eligible list. This is the clear intent and meaning of sections 2, 4 and 5 of the charter, whether read separately' or together, and there is no charter language of contrary import. Any other course would do violence to the plain meaning of the term “eligible list for promotion.” as used in section 5 i'tself, and would, in fact, make it meaningless because then, after the first promotion following the examinations had been made, there would be nothing for which those remaining on the eligible list for promotions would be eligible.
Defendants cite a number of cases which lay down rules for statutory or charter construction, but we find no conflict between the provisions of -said sections 4 and 5 and a reading, of them together presents no ambiguity. The language employed is plain, .certain and unambiguous and requires' no' interpretation. City of Grand Rapids v. Crocker, 219 Mich. 178,182; People v. Oakland County Treasurer, 312 Mich. 140, 145.
Decree affirmed, with costs to plaintiffs..
Butzel, C. J., and Carr, Bushnell, Sharpe, Boyles, Reid, and North, JJ., concurred. | [
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Butzel, C. J.
Plaintiff insurance company filed a bill of interpleader for a judicial determination as to whom it should pay the balance of the amount due on a policy for $1,000, issued on the life of Cecil Leo Holcomb, the decedent. Jesse D. Holcomb, administrator of decedent’s estate, Earl Louis McDougal,-administrator of the estate of Darlene Holcomb, deceased, and Hazel Hendrick (formerly Hazel Holcomb), all claimants, were named as defendants. The insurance company paid into court the sum of $866, the balance due on the policy after the deduction of the amount due on certain loans made to the insured. The court decreed that Jesse D. Holcomb, administrator of Cecil’s estate, was entitled to the amount due. Hazel Hendrick is the sole appellant.
The policy was issued to decedent in 1932, his wife, Hazel Holcomb, being named as beneficiary therein. The policy contained a clause giving the insured the right to change the beneficiary. He never exercised this right by any writing. He made a loan on the ■policy, and later, after his wife secured a divorce from him, he borrowed an additional amount from the insurer. He failed to pay a premium, and the policy in accordance with its terms was extended to a time subsequent to his death.
On December 12, 1942, Hazel Holcomb obtained a divorce from decedent. It was taken pro confesso. Their only child, a son by adoption, was 15 years of age at the time of the divorce decree. The wife testified that there was no property to he divided except a small amount of furniture which she was willing to leave with decedent. The decree contained the usual clause requiring the husband to pay $1 in full satisfaction of all claims the wife had in all property the husband had or was interested in at that time or might thereafter acquire. Defendant Hazel Holcomb thereafter married Earl Hendrick. Cecil Leo Holcomb went to live with Darlene Holcomb in a common-law marriage relationship; Darlene was the mother'of three children by a former marriage. Holcomb, Darlene, and her children lost their lives in a fire which destroyed the home in which they were living.
Even if Darlene had been a beneficiary, there is sufficient evidence to show that Holcomb and Darlene did not die otherwise than simultaneously, and therefore the proceeds of any policy is distributed as if the insured had survived the beneficiary. Act No. 73, § 4, Pub. Acts 1941 (Comp. Laws Supp. 1945, § 16289-2 [80d], Stat. Ann. 1943 Bev. §27.3178 [624]). The administrator of Darlene’s estate has not appealed.’
Hazel Hendrick, as sole appellant, contends that as she was the beneficiary in the policy, and there never was a change made, she is entitled to the proceeds. She points to the. fact that after the divorce, when he secured an additional loan on the policy, he-must'have realized that she was still the beneficiary but did not choose to make any change. She also showed that he was insurance minded and must have thought of protecting the proper persons when subsequent to the divorce he took out a certificate under a group policy in which he first named his mother as beneficiary but later had it changed so as to name Darlene Holcomb, his wife, as beneficiary. Appellant claims -that this indicates that decedent purposely did not change the beneficiary in the policy of which plaintiff was the insurer.
The trial judge, however, held in accordance with 3 Comp. Laws 1929, § 12766, as amended by Act No. 220, Pub. Acts 1939 (Comp. Laws Supp. *1940, § 12766, Stat. Ann. 1946 Cum. Supp. § 25.131).
“Hereafter every decree of divorce shall determine ¿11 rights of the wife in and to the proceeds of any policy or contract of life insurance * * * upon the life of the husband in which she was named or designated as beneficiary * * * whether such contract or policy was heretofore or shall hereafter be written or become effective, and unless otherwise ordered in said decree such policy or contract shall thereupon become and be payable to the estate of the husband or to such named beneficiary as he shall affirmatively designate. ’ ’
As it was not otherwise ordered in the divorce decree, the policy became and was payable to the estate of the husband, there being no other beneficiary whom he affirmatively designated.
Appellant claims that she had an interest which became vested when the policy was taken out in 1932, and that the subsequent act of 1939 could not act retroactively, for in that case it would have unlawfully deprived appellant of vested property rights. Appellant had no vested interest in a policy in which the insured reserved the right to change the beneficiary. Hooten v. Hooten, 230 Mich. 689; New York Life Ins. Co. v. Cook, 237 Mich. 303. Appellant stresses the cáse of Blum v. New York Life Ins. Co., 197 Mo. 513 (95 S. W. 317, 8 L. R. A. [N. S.] 923, 7 Ann. Cas. 1021), reviewed in 52, A. L. R. 407. The court had under consideration the effect of a statute giving the right to change a beneficiary upon a divorce being granted. Section 7895, Eevised Stat. 1899 of Missouri, was enacted long after the policy had been issued and had become paid up. The policy contained no provision giving’ the insured the right to change the beneficiary. The court therefore held that the wife had a vested interest in the policy. In the instant case, however, the policy distinctly gaye the insured the right to change the' beneficiary. There was no vested interest.
The trial judge stated that while there might be some force in the claim that the failure to designate a change in the beneficiary indicated that the insured purposely intended that his” former wife remain as beneficiary, it can be argued with equal force that he made no change either because he knew or was informed that the statutory provision (3 Comp. Laws 1929, § 12766, as amended by Act No. 220, Pub. Acts 1939) made the policy payable to his estate without any further action on his part.
Appellant further claims that all of the equities are with her. With the few facts before us, we cannot say that it was inequitable that the small amount of insurance should be paid to the estate in which the son is the heir. In any case, we are bound by the statute.
Decree affirmed, with costs in favor of the administrator of the estate of Cecil L. Holcomb against appellant Hazel Hendrick.
Carr, Bushnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Sharpe, J.
This is a mandamus proceeding instituted in this Court to determine whether the tax rate for the Huron-Clinton Metropolitan Authority for the year 1944-1945 is to be levied on the State equalized valuation for the year 1944 or for the rear 1943.
The facts forming the basis of this question'are as follows: The authority estimated the amount required for its use for the fiscal year 1944^-1945 to be $745,978.13, and determined that the necessary tax rate to raise that amount would be three-sixteenths of a mill on the dollar of assessed valuation in the five counties. It so certified to the boards of super visors of the counties on May 9,1944, setting' up also the amount apportioned to the several counties according- to the State equalized valu.e for 1943, the last equalization then in force. The amount so apportioned to Oakland county was $64,687.50.
•After this certificate was filed, the State equalization for 1945 was made. Under this equalization, in force at the time of tax collection in December, 1944, the amount of the tax at the rate of three-sixteenths of a mill on the equalized valuation in Oakland coiinty would be $75,000.
The Authority requested defendants, as the financial officérs of Oakland county, to pay to it the amount of tax collected on the basis of a total tax of $75,000 at the rate of three-sixteenths of a mill on the 1944 equalized value. The county refused to pay on that basis on the ground that the rate of three-sixteenths of a mill should be applied to the 1943 equalized value.
Act No. 147, § 7, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 2289-7, Stat. Ann. 1946 Cum. Supp. §5.2148 [7]), creating the Huron-Clinton Metropolitan. Authority as a metropolitan district provides :
“The commissioners may levy for the purposes of the authority a tax of not more than one-quarter mill upon each dollar of the assessed value of the property, of the district. The board shall ascertain the total taxes or appropriation required for any year and shall thereupon certify to the board of supervisors of each county comprising the district the necessary tax rate to raise such amount, which shall be uniform in the district, and shall take into consideration the ratio that the total assessed valuation of each respective county bears to the total assessed value of all property, real and personal in said entire district according to the last assessment in each of said respective counties.”
We have had occasion to construe the above section in Huron-Clinton Metropolitan Authority v. Boards of Supervisors of Five Counties, 300 Mich. 1, 24, we there said:
‘ ‘ The act does not create a separate and independent tax unit to which its portion of our millage tax must be apportioned by the tax allocation boards of the respective counties. ’ ’
In Huron-Clinton Metropolitan Authority v. Boards of Supervisors of Five Counties, 304 Mich. 328, 340, we said:
“The State board of equalization is the final authority which determines valuations upon a standard uniform to all counties. To produce the required uniformity between counties of the district, the Authority tax rate should be determined upon the basis of State-equalized valuation. ’ ’
It is now settled law that the Authority is not a separate and independent taxing unit and that the tax rate fixed should be levied on the property according to the State-equalized valuation.
Defendants urge that the Authority does not determine the tax rate, but certifies to the counties the total amount of its. Vudget and the proportionate part of that amount to be raised by each county-according to the previous year’s State-equalized value. The act does not state when the commissioners shall determine the amount to be raised and the tax rate to be levied, except that by virtue of 1 Comp. Laws 1929, §3425 (Stat. Ann. §7.55), it should be'done prior to the October session of the board of supervisors.
As a matter of convenience the Authority determined its tax rate prior to the second Monday of May of each year in order that counties might include the Authority’s tax in their budgets. In so doing the Authority used the valuations of the previous year. When the tax allocation board as provided for in Act No. 62, Pub. Acts 1933, as amended, is in session it examines the budgets and statements of local units and determines the tax rates exclusive of debt-service tax rates which would be required according to its proposed budget. These budgets or estimates must be filed with the county tax allocation board on or before the second Monday in May of each yéar. At this time the allocation board uses, as a basis for determining the tax rate, the assessed valuation as equalized for the previous year, however, the amount of money to be raised is subject to variations by the future process of State equalization.
The measure of the tax rate is the assessed valuation of the current year as corrected by equalization for the next tax roll. Bach year establishes a new valuation for the levy of its taxes. All taxes should be.levied and collected under the latest official valuation.
The Authority is entitled to the proceeds of the tax rate fixed by its commissioners as applied 'to the State-equalized value of the year in which the tax is collected. The writ of mandamus will issue, if necessary, requiring the board of supervisors and the county treasurer of Oakland county to make a settlement of the 1944 taxes on the basis of three-sixteenths of a mill on the 1944 valuation of $400,000,000, or a total of $75,000. A public question being involved-, no costs are allowed.
Caer, C. J., and Butzel, Bushnell, Boyles, Reid, North, and Dethmers, JJ., concurred.
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Butzel, J.
On April 30, 1918, John O. Yon Zellen obtained two loans from the First National Bank of Hancock, Michigan, each in the sum of $2,500, and each secured by a first mortgage on timber lands, one in Baraga county and the other in Marquette county, Michigan. The bank assigned both mortgages to the Cartier-Holland Lumber Company, a copartnership composed of Charles E. Cartier and Edward M. Holland, which entered into a selling and operating contract with John O. Von Zellen and Oscar Von Zellen, copartners trading under the name of Arvon Lumber Company. On January 22, 1921, the Cartier-Holland Lumber Company began suit to foreclose the mortgage on the Baraga county property. Subsequently the Grand Rapids Trust Company, as trustee of the Cartier-Holland Lumber Company, was substituted as plaintiff. Defendants filed a cross-bill, claiming that there was a large amount due to them by way of set-off and recoupment, which, if allowed, would extinguish the mortgage claims. The court denied their claim and entered a decree of foreclosure on May 12, 1924. Defendants then instituted, but failed to perfect, an appeal to this court. They had delayed taking proper action for almost a year after the decree had been filed, and for over six months after the last extension of time had expired. We held that the trial judge had properly refused to sign a “case made” or extend the time for settling and signing the record. See Von Zellen v. Baraga Circuit Judge, 232 Mich. 568. The foreclosure decree rendered by the circuit court thus became absolute and notwithstanding the efforts made in the present appeal, to reopen the former case, we decline to review a case that has become res judicata.
Pursuant to the foreclosure decree, the circuit court commissioner of Baraga county advertised the sale of the lands in question at the courthouse in the village of L’Anse on April 2,1929. He later adjourned the sale, however, to April 8, 1929, without' making a public declaration of the adjournment at the time and place previously appointed for the sale, and plaintiff bid in the property at that date. Because of the absence of such public declaration of adjournment, the trial judge refused to confirm the sale, and set it aside. On appeal we held that the omission to make such public declaration in accordance with 3 Comp. Laws 1929, §§ 14588, 14620, rendered the sale invalid.
See Grand Rapids Trust Co. v. Von Zellen, 260 Mich. 341. In the latter cáse it was also shown that during the period which elapsed between the • attempted sale and the time it was set aside, plaintiff had deeded a strip, 400 feet in width, of the land in question, to the State of Michigan for highway purposes, and the State had completed a paved road 200 feet in width, extending over a part of the strip so conveyed. Plaintiff endeavored to show the interest of the State and the circumstances of the sale as ground for confirmation of the sale, but the trial court refused to receive the evidence. We held that the court was correct in its refusal, and that the State received no title. The situation at this stage of the case, therefore, was that a decree of foreclosure had been rendered, and had become absolute. The first sale attempted thereunder was a nullity. It accordingly became necessary to have a new sale.
A second sale was held on January 31, 1933, and the property was again bid in by plaintiff, for a price less than the amount due on the mortgage. The sole question that we can now consider, notwithstanding the three volumes of record and a supplemental record presented to us, is the regularity of the second sale, which was held in accordance with the decree and was confirmed by the trial judge.
Within eight days after the order nisi confirming the second sale was entered, defendant John O. Von Zellen filed certain specific objections thereto. Olga Von Zellen, a daughter of Oscar Von Zellen, filed no objections to the order nisi, but first appears in the case by the filing of a preliminary notice of appeal. She asserts a right as heir of Oscar Von Zellen, deceased, and makes substantially the same claims as John O. Von Zellen. Therefore, in view of the decision we have arrived at, we need not discuss the motion made to dismiss her appeal. It is unfortunate that appellants, acting in their own proper persons, have seen fit to go to all the trouble and expense of claiming some 61 grounds for appeal, almost all of which relate to the original hearing and to the entering of a decree that" has become res judicata. We may only consider such questions as affect the regularity of the last sale and its confirmation by the trial judge.
Appellants claim that inasmuch as chancery cases are heard de novo, therefore, in reviewing the confirmation of the second sale, we should reopen the entire case. They further contend that under Court Rule No. 59, § 9 (1931), where more than one decree has been rendered in a chancery case, an appeal from any such decree may include a review of any or all prior decrees at the option of appellants. However, this right of review, as granted under the above rule, extends only to interlocutory decrees, leading up to the final decree. As was said by Mr. Justice Wiest in Poxson v. Poxson, 260 Mich. 625, the rule was intended only to avoid piecemeal appeals. It does not affect a final decree. After a final decree has become absolute and res judicata, it is no longer reviewable on appeal. This disposes of appellants’ claim that they were forced to trial on a 15- hour notice, as well as the claim that Oscar Yon Zellen, one of the copartners, died after the hearing and before the decree was signed, and that, therefore, the decree was rendered against the dead. We might add that the decree did not run against Oscar Yon Zellen personally, nor did it hold him liable for a deficiency. He was represented at the hearing by his attorney, and no mention was made of his death in any of the former appeal proceedings, nor, in fact, at any time prior to the last sale, from the order confirming which this appeal is brought. Upon Oscar’s death, John O. Yon Zellen represented the copartnership as surviving partner. It was his duty to look after its interests. The death of a co-partner during the progress of a case, which is not brought to the attention.of the'court until 10 years after its occurrence, during which, period the surviving partner has looked after the interests of the copartnership, is insufficient ground to warrant setting aside a sale.
Appellants seek to relate the errors claimed in the present appeal to another case, heard by the Honorable Frank A. Bell, circuit judge in Marquette, Michigan, involving foreclosure of the mortgage on the Marquette lands. Had the court in the Baraga county case found, as claimed by appellants, that sums were owing to the latter from the Cartier-Holland Lumber Company, more than sufficient to pay off the mortgage on the Baraga county lands, such surplus might have been applied towards the payment of the mortgage on the Marquette county lands. However, the court did not so find, and the decree became final. The parties entered into a stipulation through their respective attorneys that the Marquette county foreclosure case would be governed by the results of the Baraga county case. Ap pellants now make the claim that the stipulation was fraudulently entered into, and have filed in the present appeal the record of the testimony in the Marquette county case. The latter case is not properly before us, and we decline to consider it.
Appellants further claim that the sale was not held open for a reasonable length of time, and that the property was bid in by plaintiff with undue haste, only about eight minutes after the opening of the sale. This was a chancery sale, properly advertised, and there is no showing whatsoever that any persons were prevented from bidding or that there were any other bidders present at the sale. Under the circumstances, there was no obligation to hold the chancery sale open, and there is no merit in appellants ’ claim of error.
The only other question that we need consider is whether the second sale was irregular as a result of plaintiff’s earlier mistaken and ineffectual attempt to sell part of the mortgaged premises to the State of Michigan. In the case reported in 260 Mich. 341, we held that this attempted sale was a nullity, and passed no title. Appellant John O. Yon Zellen, on the confirmation of the second sale, introduced into evidence the deed to the State of Michigan, stating that it was an invalid deed. When the court called his attention to the fact that the deed was a nullity and passed no title, he declared that large amounts of timber had been removed from the property without any right or title thereto, and that he had begun a suit against plaintiff and another on October 26,1932, to recover the.damages he had suffered thereby. He claims that the amount of such damages should have been deducted from the sum due under the mortgage. He also contends that the void deed to the State created a cloud on the title, made the property less valuable, and tended to discourage bidders, who would not want to buy a law suit, and that for this reason the property brought a lesser price at the sale. Appellants could not stand by until after the sale had taken place, and then seek to have it set aside and an accounting rendered, when prior to the sale they had alréady made an election to recover their damages by a suit in trespass. Other questions raised are without merit and need not be considered.
"We believe the trial court was correct in confirming the sale, and its order is herewith affirmed. Plaintiff will recover costs.
Nelson Sharpe, O. J., and Potter, North, Fead, Wiest, Bushnell, and Edward M. Sharpe, JJ., concurred. | [
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Sharpe, J.
Plaintiffs are the widow and minor son of Bernie P. O’Neil who died from cardiac failure on February 11, 1944. Deceased was a man 54 years of age, weighing about 380 pounds. He had been employed for several years by the W. R. Spencer Grocer Company as a salesman calling on retail grocers in the city of Jackson. Beginning late on the evening of February 10, 1944, about eight inches of snow had fallen up to 9 a.m., on the morning of February 11th.
On February 11, 1944, Mr. O’Neil made calls on various grocers during the forenoon and went home for lunch. During the afternoon he also called on various customers. About 4:45 p.m., deceased’s car was seen stuck in the snow. Two or three boys were attempting to push it, while deceased was standing by the car steering it. About 5 p.m., he parked his car in the street in front of his home, went into the house, worked on some orders, ate dinner with his family, and then drove back to the office to attend a sales meeting at 7 p.m.
After the meeting was over,- an assistant manager of the company rode home with Mr. O’Neil to a point four blocks from Mr. O’Neil’s home. Mr. O’Neil appeared to be in normal health at that time. About 8:30 or 8:45 p.m., Mr. O’Neil came in the front door of his home. He was breathing hard, there was a bloody froth coming from his mouth, and he appeared to be in distress. He expired shortly after his arrival at home, before a doctor could be summoned.
Plaintiffs’filed an application for hearing for adjustment of claim upon the theory that deceased had suffered a personal injury arising- out of and in the course of his employment or became disabled from an occupational disease. Plaintiffs urge that deceased had suffered a personal injury; and that the fortuitous event was the effort occasioned by the hazard of driving his car while roads were covered with a mantle of snow.
Defendants contend that deceased died of natural causes without the intervention of a fortuitous event; or that death was due to over exertion causing a strain on the heart when Mr. O’Neil made an effort to drive his car into his driveway after he had completed work for the day and had reached his home.
In awarding compensation, the department of labor and industry made the following finding of facts:
‘ ‘ The exact cause of his death, other than cardiac failure is not shown. There is medical testimony indicating over exertion might bring on cardiac failure. A diseased heart is more susceptible to strain by over exertion than a normal heart. Here we have a man with an abnormal heart which could easily be strained by over exertion, who does exert himself in the car incident and die^ approximately four hours later. Under those circumstances we are constrained to conclude that he did over exert himself and strain his heart in attempting to free his car and that that incident aggravated a pre-existing heart condition has hastenéd his death. Deceased was required to use a car in his work. The hazards of the street associated with an unusually heavy fall of snow were incident to his employment for the reason that transportation was an essential part of his employment. We find the deceased sustained a personal injury arising out of and in the course of his employment.”
Defendants appeal and urge that there was no fortuitous event resulting in injury to deceased; that the disease was not characteristic of and peculiar to the business of the employer; and that the cause of death was an ordinary disease of life.
In Hagopian v. City of Highland Park, 313 Mich. 608, 619, 621, 625, the opinion of Mr. Chief Justice Butzel reads in part as follows:
“We have frequently held that under the compensation act, prior to the adoption of the occupational disease amendment, one performing the ordinary work for which he is hired cannot recover unless there is an accident or a fortuitous event causing the disability. * # *
‘ ‘ The amended act itself was not intended to cover aggravation of pre-existing disease without an accident or fortuitous event. * * *
“It properly was restricted to accidents and occupational diseases.”'
The fortuitous event relied upon by the department is stated as follows:
“The deceased’s work as a salesman required the use of his car. It was necessary for him to travel on the streets in whatever condition they might be. On one occasion at least, he was seen to be stuck with his car in the snow. He was alongside of the car steering the wheel and undoubtedly was helping to free the car.”
The record is void of any evidence that deceased was seen pushing the car. The driving of his car in heavy snow throughout the day cannot be termed a fortuitous event. It was an experience common to all motorists in the city of Jackson on that particular day. Moreover, from 4:45 p.m., when deceased was having trouble with his car, until about 8:30, when deceased drove his superior officer to within four blocks of his home, there was no testimony indicating that deceased was other than normal. In our opinion, plaintiffs have failed to supply competent evidence of the fact that deceased received an injury from an accident growing out of and in the course of his employment. Nor can it be said that the death of Mr. O’Neil was caused from a disease due to causes and conditions which are characteristic of and peculiar to the business of the employer and which arises out of and in the course of the employment. The record substantiates the claim that deceased’s death was due to a disease of life to which the public in general is exposed.
The award is set aside, with costs to defendants.
Butzel, C. J., and Carr, Bushnell, Boyles, Reid, North, and Dethmers, JJ., concurred.
See 2 Comp. Laws 1929, § 8417, as amended by Aet No. 245, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 8417, Stat. Ann. 1946 Cum. Supp. § 17.Í51).—Reporter.
See Act No. 10, pt. 7, §1, Pub. Acts 1912 (1st Ex. Sess.), as added by Aet No. 61, Pub. Acts 1937, and amended by Act No. 245, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 8485-1, Stat. Ann. 1946 Cum. Supp. § 17.220).—Reporter. | [
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North, C. J.
This is a mandamus proceeding by which plaintiff, Abraham Blumlo, seeks to compel Hampton township board to grant him a license to engage in the business of dismantling, wrecking and disposing of automobiles and automobile parts, such business to be conducted on plaintiff’s property hereinafter described. The relief sought by plaintiff was granted in the circuit court. The officers constituting the township board have appealed.
The statute under which townships are authorized to “adopt a resolution providing for the licensing of junk yards and places for dismantling, wrecking and disposing of * * * automobiles” reads in part as’ follows:
“The township board of any township may, at any regular meeting, adopt a resolution providing for the licensing of junk yards and places for the dismantling, wrecking and disposing of the junk and/or refuse material of automobiles; may prescribe the amount of an annual license fee which shall not exceed twenty-five dollars, and prescribe the form of an application for such license, and adopt rules, regulations and conditions for the operation thereof, which in the discretion of said board will best protect the public health, interests and general welfare of their township, * * * Provided, * * * rjr^g township board may in its discretion, for just cause, refuse to grant, the license provided for in this act.” 2 Comp. Laws 1929, §9766, as amended by Act No. 34, Pub. Acts. 1935 (Comp. Laws Supp. 1940, § 9766, Stat. Ann. § 19.731).
Pursuant to the above statutory provisions and prior to plaintiff’s application for a license, Hampton township enacted an ordinance from which we quote the following:
“Section 1. No person, corporation, copartnership or firm shall hereafter own or operate or use any junk yard within the- township of Hampton, county of Bay, without having first obtained from, the clerk of said township a license for the junk yard or place for the dismantling, wrecking and disposing of automobiles. * * *
“Seo. 4. No license shall be issued for any premises which are restricted to private residence purposes, nor shall any license be issued for any premises restricted by any (zoning) resolution or regulation. * * * '
_ “Seo. 15. Should provision of any section of this resolution be held unconstitutional or invalid, such holding shall not be construed as affecting the validity of any of the remaining (which) shall stand notwithstanding the invalidity of any provision or section.”
' Other provisions of the ordinance detail the manner of making the application for a license, referring the same to the township supervisor for making an investigation and recommendation to the township board “and if in the opinion of the township board the person making the application is a proper person and the place to be used is a proper place for such business, it may authorize the granting of a license upon the payment of the license fee (of $25), which said license shall be issued by the township clerk. The township board may in its discretion, for just cause, refuse to grant the license provided for in this resolution.”
The reason in consequence of which the township board denied plaintiff’s petition for a license is stipulated in the record as follows:
“Testimony at the trial showed further that the reason the township board refused to issue the license to the plaintiff was because the land intended to be used as a dismantling yard was in a vicinity primarily used for residential purposes.”
Within the definition of the township ordinance an automobile dismantling lot is a junk yard1! The property in the location affected is not subject to plat restrictions or to a zoning ordinance. The general surroundings and plaintiff’s asserted intended nse of his property -are clearly stated in the circuit judge’s opinion from which we quote:
“The site upon which plaintiff proposes to operate his business is on the south side of Center avenue, a State highway, from a quarter to a half mile east of the eastern limits of the city of Bay City. The property opposite and on the north side of Center avenue is used largely for business purposes. The property on the south side east and west of the proposed site is occupied by a very limited number of residences, by a chicory plant between the site and eastern city limits, and by a store an eighth to a quarter of a mile to the east. The balance of the property is vacant or used for farming purposes. The site can hardly be said to be within a strictly residential district.
“In.plaintiff’s application for license he states that he proposes to erect a home on the northerly part of the site nearest to Center avenue, a building for the sale of used parts farther to the south, and to enclose a place at least 300 feet south from the highway for the dismantling and wrecking of auto-' mobiles. Tie further states at no time will there be an unsightly display of bodies of wrecked automobiles or parts thereof.”
Since, as above noted, the proposed site is not within a restricted area, the refusal of the township board to grant the license was not authorized by any provision of the ordinance, except the portion of section 3 which reads: ‘1 The township board may in its discretion, for just cause, refuse to grant the license. ’ ’ Of necessity the township board must have assumed that the portion of the ordinance just above quoted authorized its action. But this portion of the ordinance is invalid because it contains no controlling standard of action and attempts to vest the township -board with power to act arbitrarily. In effect the quoted ordinance provision attempts to empower the township board to grant or deny a license for any cause which in the exercise of its discretion may be deemed just. This opens the door to captious action without any standard as a basis of determination, and renders the discretionary provision of the ordinance invalid. This phase of the law is so thoroughly and clearly stated in People v. Sturgeon, 272 Mich. 319, that it need not be repeated. See, also, Ritter v. City of Pontiac, 276 Mich. 416. But under the severance clause in the ordinance we hold the remaining portion of the ordinance valid; and that plaintiff is entitled to mandamus, as adjudged in the circuit court.
Appellants’ contention that since plaintiff asserts the ordinance in part is invalid (as above held), he cannot obtain relief by mandamus, is not tenable. If the ordinance was adjudicated invalid in toto, it is obvious that relief under such invalid ordinance could not be obtained by mandamus or otherwise. But when, as in the instant case, the ordinance after eliminating an invalid provision is still held to be' good, mandamus is a proper remedy by which an aggrieved party may enforce a clear legal right asserted under the valid portion of the ordinance.
The judgment entered in the circuit court granting mandamus is affirmed, with costs to appellee,
Starr, "Wiest, Butzel, Btjshnell, Sharpe, Boyles, and Reid, JJ., concurred. | [
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Kelly, J.
Defendant was convicted of assault and battery by recorder’s court Judge Hon. Prank Gr. Schemanske and sentenced to 90 days in the Detroit House of Correction. He was not represented by counsel.
At the conclusion of the 90-day sentence defendant was returned to prison. The chairman of the Michigan department of corrections parole board explains his return as follows:
“He served his term at the Detroit house of correction, was returned to prison and found to be automatically guilty of violating his parole by reason of his conviction.”
This is a companion case to People v. Mallory, 378 Mich 538, and the reasons set forth in my concurring opinion for reversal in that case apply to the present case.
Reversed and remanded to recorder’s court for appointment, upon finding of indigency, of appellate counsel for defendant and furnishing of all portions of the transcript and record essential in preparation of postconviction motions and appeal.
T. M. Kavanagh, C. J., concurred with Kelly, J. | [
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Beid, J.
Plaintiff and appellee filed its declaration July 29,1943, alleging that defendant and ap pellant, receiver of the railroad company, entered into a contract by which plaintiff agreed to sell and defendant agreed to buy of plaintiff approximately 7.7 tons of ice per day during the icing season of the year 1942,( amounting to substantially 3,000 tons of ice for the year; that the defendant accepted delivery and paid for only 66 tons of ice and declined to receive delivery of over 2,500 tons of ice for which it had contracted. The declaration further sets out the preliminary correspondence between the parties, exhibits A, B, C, D, E, P and Gr, and contract prepared by the defendant, signed by both parties, dated January 30, 1943, exhibit H. Plaintiff further alleges that exhibit H contained the words, ‘ ‘ such ice as may be required at Menominee,” which the declaration alleges to be indefinite and ambiguous unless understood in the same sense as the word “require” was used in correspondence, including exhibit C, which is, “"We will require approximately 7.7 tons per day.” The declaration further alleges that in reliance upon the contract plaintiff harvested and stored for delivery to defendant large' quantities of ice for which it would not .have use except for the purpose of fulfilling the contract.
The answer alleged that exhibit IT was a contract complete in itself, free from ambiguity, and constituted the entire and only arrangement between the parties to this litigation for the sale, purchase and delivery of ice between plaintiff and defendant at Menominee during the period provided in the contract, January 2, 1942, to December 31, 1942.
Exhibit A, dated November 24,1941, was a request from defendant’s general purchasing agent addressed to plaintiff requesting price quotation on ice at Menominee during the season of 1942.
Exhibit B was a letter from plaintiff to defendant dated November 27, 1941, answering exhibit A and containing the words,
“We would appreciate your advising us how many cars you would require filled with ice and the time of filling.”
Exhibit C, in reply to exhibit B, was dated January 2, 1942:
“Referring to your letter November 27, file CJS, regarding the number of. cars that will require icing and the time of day it will be required.
“We have just received advice from our operating department that we will require approximately 7.7 tons per day. Delivery of this ice will be made at 7 a. m. for train No. 210 and 9:30 a. m. for train No. 214; also between 2 p. m. and 3 p. m. daily for train No. 224. On Sundays, trains Nos. 220 and 244 will require ice around noon time.
“With this information will you kindly quote us price on our ice requirements for 1942.”
Exhibit D, dated January 12, 1942, in reply to exhibit C, contained1 an offer of the prices, and further contained the words,
“The above quotation is for prompt acceptance, as the labor situation is becoming more acute here every week, and we will have to give the filling of our ice house immediate attention: ’ ’
Exhibit E, from defendant to plaintiff, dated January 17, 1942, contained the words,
‘ ‘ See if you cannot give us a more favorable figure for our 1942 requirements * * * We are able to purchase this ice at a more favorable figure. ’ ’
Exhibit F was dated January 21,1942, from plaintiff to defendant:
“Replying to your letter of the 17th, File 2-60-18, and confirming our telephone conversation of today with you, we will be glad to furnish your ice requirements at Menominee, Michigan, at a reduction of 50 cents per ton below onr quotation dated January 12,1942.
‘ ‘ This is for prompt acceptance, and we would appreciate it' if you could wire us if accepted and contract could come along later, as we are filling now and prefer not to put up any more than our requirements on account of labor conditions at this time. ’ ’
Exhibit Gr is dated January 23,1942, from defendant to plaintiff: ■
“Referring to yours January 21st, file CJS, wish to advise that in the next day or two we will forward you our ice contract covering requirements for 1942.”
Exhibit I, not attached to the declaration but received in evidence on the trial, is a letter dated January 28,' 1942, from the defendant to the plaintiff, also signed as accepted by the defendant:
“Enclose for your signature, contract in duplicate, covering our ice requirements at Menominee, Michigan, during 1942. Kindly sign and return the original for my file. Inasmuch as insurance covering public liability will expire as of March 1, 1942, it is understood of course, that same will be renewed at that time, and will.be pleased to receive certificate of insurance indicating the insurance is in force for the protection of the railway and agreeing to give 10 days notice of cancellation or modification of said protection. ’ ’
The important part of exhibit H, apparently inclosed with exhibit I, is:
“Menominee Lumber & Cedar Company, Menominee, Michigan, hereinafter called ‘contractor’ agrees to sell, and the Chicago & Northwestern Railway Company, hereinafter called ‘railway company’ agrees to buy such ice as may be required at Menominee, Michigan, during the period January 2, 1942, to December 31,1942, under tbe following terms and conditions:
“Price:
Ice placed in bunkers of air conditioned cars
$3.50 per ton.
Ice placed in box' for general use, suck as refrigerator cars, water coolers in coaches and road and switch crews, et cetera
$2.50 per ton.
££ Delivery:
To be as required by railway company.
“ Payment:
Payment to be made by the 20th of each month for all ice delivered during the previous month. ’ ’
The contract further contained provisions for indemnity from liability for- acts in performance of the contract, nothing abóut insurance, but a waiver as to local, State or Federal laws and liability if the contract were terminated under such laws.
No explanation is offered by either' party of the reason for the almost total failure of defendant to accept deliveries of ice. There is a hint on that subject in exhibit E that the defendant could buy ice cheaper elsewhere.
Both plaintiff and defendant cite Hickey v. O’Brien, 123 Mich. 611 (49 L. R. A. 594, 81 Am. St. Rep. 227), in which John F. Lucas & Company made a contract with Kreutzberger & Crabbe,
“To furnish second parties with all the ice that they may require to carry on their ice business in said city for the period of five years from and after March 1, 1895 at the rate of 75 cents per ton.”
On p. 615 the Court said:
“ Kreutzberger & Crabbe undertook to take ice of Lucas & Company for the period of five years; that the quantity which they agreed1 to take was to be measured1 by the necessities of their business, but this presupposed that they would have a business for the time agreed.”
In that case the contract was to furnish “all the ice that they may require to carry on their ice business in said city,” and the Court did not hold such contract void for uncertainty.
Defendant further cites F. B. Holmes & Co. v. City of Detroit, 158 Mich. 137, and Stuart v. Home Telephone Company of Detroit, 161 Mich. 123.
In the instant case plaintiff required of defendant an estimate of the amount of ice to be used by defendant as á necessary step and part of their negotiation and received that estimate in exhibit C as 7.7 tons per day. All the steps that led to the signing of exhibit H were by correspondence and were before the court and jury, except the telephone conversation referred to in exhibit F, which is shown by exhibit F to refer only to a reduction of 50 cents per ton in the proposed price in view of the request of defendant in exhibit E, It cannot be assumed that any of the other matters were waived or progress of negotiations changed by this telephone conversation except to lower the price 50 cents per ton. Plaintiff did not show exhibit H to its attorney before signing it, but does not ask to be relieved from any of its terms and on the contrary brings suit upon it.
It appears from exhibit I, the letter by which exhibit H was submitted to the plaintiff for signature, that exhibit H did not contain all the terms of the contract between the parties because insurance was a further item that was required by defendant to be considered as a part of the contract. It is improbable that the plaintiff actually intended to waive the estimate as to the quantity of ice to be furnished1. The necessity of harvesting and storage was im perative and known to defendant, who also knew that ice not requisitioned would be a total loss to plaintiff. The defendant, the party asserting tbe rule as to tbe presumption of merger of previous negotiations into a written instrument, is tbe very party whose letter submitting the contract for signature shows that he did not so understand the situation and invited the other party to take the same view.
The trial judge was justified in submitting to the jury the previous correspondence to show the amount intended by the word “required.”
The charge to the jury gave abundant latitude as to permissible variations by defendant from the estimated requirements. Plaintiff does not complain on that subject and defendant has no cause to complain. Judgment affirmed, with costs to the plaintiff.
North, C. J., and Starr, Wiest, Butzel, Bushnell, Sharpe, and Boyles, JJ., concurred. | [
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Reid, J.
This petition is brought for mandam'us to require the commissioner of insurance to continue the license of plaintiff to write insurance as an agency. Plaintiff is a Michigan corporation, incorporated December 9, 1940, with powers under its charter to conduct the business of an insurance agency. License was applied for and issued December 26, 1940, and has been renewed each year since.
A complaint was filed with the commissioner. He sent plaintiff notice of a hearing which was held in his office October 13,1943, at the conclusion of which the license was revoked. At the hearing testimony was introduced on the relationship between plaintiff and the Industrial National Bank—Detroit, a Fed-' eral corporation.
“Licenses for agents shall be issued only to persons who are actual residents of this State, or to corporations of this State.” 3 Comp. Laws 1929, § 12339, as amended by Act No. 163, Pub. Acts 1931 (Comp. Laws Supp. 1940, § 12339, Stat. Ann. 1943 Rev. §24.133).
Plaintiff, proceeding on the theory that the revocation was on the ground that the same persons held all the shares of the capital stock of the two corporations, claimed that consequently the ruling was discriminatory and a deprivation in violation of section 1 of the Fourteenth Amendment to the Federal Constitution. Defendant admits that his action could not have been well taken on so narrow a ground. He evidently was led by that state of affairs to scrutinize the affairs of plaintiff more closely.
The issue on this appeal is whether plaintiff’s activities are controlled by the bank and whether the bank by indirection and subterfuge obtained this license in the name of plaintiff to evade the State statute and the Federal statute (12 USCA, § 92) which permits a national bank to act as insurance agent only when located in places of less than 5,000 population.
The policy of government respecting such matters as intimate relationships between banks and insurance agencies is for the most part set forth in legislation and executive actions. Congress views with none too great favor a national bank acting as insurance agent, forbidding it in places of 5,000 or more population.
Mr. Bramble, the commissioner’s investigator, in his report, made March 27,1942, found:
“The patent fact that all business of the Washington Agency, Inc., originates in the Industrial National Bank—Detroit, and with clients of the bank, particularly with applicants for loans secured by personal property, presents implications subject to interpretation that the close relationship of the agency and the bank is not conducive to practices desired by this department.”
It appears that the bank and plaintiff were organized at the same time.
Plaintiff sets forth that the Industrial National Bank—Detroit succeeded the Industrial Morris Plan Bank which practically from the .beginning of its business in 1917 had found it necessary to render assistance to borrowers in obtaining insurance, and claims that requiring such insurance is common practice among lenders of money, individual and corporate; also that by correspondence when the Industrial National Bank—Detroit was organized, the comptroller of the currency treated the Washington Agency, Inc., as an affiliate of the bank, that is, that their relationship consisted only in the fact that their stockholders were the same persons.
When plaintiff was organized, the original capital was paid in December 9, 1940, by Mr. Bowen, who was the sole stockholder,* at the first meeting after incorporation, December 17, 1940, Messrs. Lewis, Turnbull, Bopp, Bugg, McLean, Taub and Bowen were elected directors, all of whom except Bowen were officers and directors of the bank. The only shares of stock that were ever issued were the shares to Mr. Bowen, which shares in turn were later issued to the four trustees, Messrs. Lewis, Turnbull, Bopp and Bugg, who were principal officers of the bank.
Their declaration of trust dated January 20,1941,' stated that they held the legal title to the shares for the use and benefit of the stockholders of the bank but trustees had the right to vote and exercise all acts of ownership of the stock of plaintiff. A majority of the directors of the bank could at will remove any or all of the trustees. The shareholders of the Washington Agency, Inc., received their dividends along with their bank’s dividends, all in one check. Plaintiff showed that the Washington Agency, Inc., wrote the insurance in an average of about 40 per cent, of the bank’s loans in the last three years.
Not until after a preceding hearing. before the commissioner of insurance was provision made for the issuing of any certificates to the shareholders of plaintiff corporation. Later and apparently on October 26, 1943, the shareholders were notified of a change in the terms of the trust whereby each had the right to get his certificate on request. The same notice said, “I.t is believed that'it is more convenient and better for all concerned that the shares be left with the trustees.” No stockholder asked for his certificate.
There was competent testimony to indicate that plaintiff is organized under a plan by which the executive officers of the bank have entire control over plaintiff’s operations for the financial benefit of the same persons who are the bank’s stockholders.
The commissioner found:
“The Washington Agency, Inc., was organized to circumvent 3 Comp. Laws 1929, § 12339, as amended, by indirection and subterfuge, by obtaining an insurance agency license for the benefit of the Industrial National Bank, which is prohibited by such law; and it further appearing that there was sufficient cause shown that the said Washington Agency, Inc., is not a ‘proper and fit’ corporation to be permitted to transact business as an insurance agent in this State contrary to 3 Comp. Laws 1929, § 12344, as amended [by Act No. 163, Pub. Acts 1931 (Comp. Laws Supp. 1940, § 12344, Stat. Ann. 1943 Rev. § 24.138)] and’ 12 USCA, § 92, because of its inevitable control by and identity with the said Industrial National Bank; and1 it further appearing that the said 'license is employed contrary to public policy;
“It is ordered that the insurance agent’s license of the Washington Agency, Inc., be and the same is hereby revoked.”
Courts will not interfere with the act of a public administrative officer acting fairly within the scope of his authority. The testimony, taken as a whole, furnished a basis for defendant’s finding. The petition must be dismissed, with costs to defendant.
North, C. J., and Starr, Wiest, Bushnell, Sharpe, and Boyles, JJ., concurred with Reid, J. | [
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O’Hara, J.
This is an appeal upon leave granted from a decision of the Court of Appeals. The decision affirmed a denial of compensation made by the workmen’s compensation appeal board. The board’s order reversed the decision of the hearing referee, which had required payment to the appellant of compensation benefits based on a finding of total disability.
It is stipulated that at the time of his injury, appellant was engaged in common labor. He was operating a punch press. The press malfunctioned, injuring plaintiff severely and resulting in the amputation of his left hand diagonally from the second metacarpal. It is beyond discussion that he has lost the industrial use of the hand. He was paid for the specific loss period of 215 weeks. In the meantime, he was re-employed by appellee in a clerical capacity at a wage equal to or greater than that he had earned previous to his injury. The record leaves no doubt that the employer-appellee made every possible effort toward plaintiffs rehabilitation. The work to which appellant was assigned was found by the appeal board to be “a regularly recognized occupation and not made work.” This finding of fact is binding upon us. Citations to cases would be superfluous.
After some time, appellant became dissatisfied with his work. He found, he testified, that its clerical nature made him nervous. With medical support for this contention, he asked for and received a leave of absence. He went to his birthplace in Tennessee. He did not return at the end of his leave, which expired on or about April 20, 1960. He stayed on in Tennessee until March of 1961. In that year he worked briefly in a garage as an assistant service manager. So far as the record discloses this job terminated for lack of work. Upon his return to Detroit, the place of his injury and prior employment, he sought work only from his former employer. He was advised no work was available, and thereupon he filed a claim for additional benefits. The referee found total disability and consequent payment until further order of the department.
The Michigan workmen’s compensation law provides for the payment of a weekly benefit to an injured employee claiming partial or total disability, under sections 9 or 10 of part 2 of the act, of 66-2/3% of his average weekly wages before the injury but in no case does it permit such claimant to receive benefits which, when added to his current wage-earning capacity, would exceed his average weekly earnings at the time of injury. His wages before the injury are a known factor. What he is “able” to earn thereafter is a matter of proof and an issue of fact. Because our law does not award benefits for industrial injury and consequent disability alone, a body of case law has of necessity grown up interpreting the statutory term “weekly wage loss.” Presumably and actually, an employee can be injured, disabled to a degree, and yet suffer no weekly wage loss because he is shown to be able to earn an amount equal to or greater than that which he was earning at the time of his injury. In many instances from the highest motives of desire to rehabilitate the employee and restore him as a wage-earning member of society, some employers have retained injured employees in new jobs within their capacity to perform. It is not difficult to perceive, however, that an ill-intentioned employer desirous of avoiding compensation payments could rehire an injured and disabled employee, establish his capacity to earn as much or more than before his injury and terminate his employment. Then, if the bare elements of proof of what the employee was paid were construed as establishing his “earning capacity” the whole purpose of the act would be vitiated.
Thus, the method of determining the employee’s earning capacity, as that term is used in the act, is a complex of fact issues which are concerned with the nature of the work performed and the continuing availability of work of that kind, and the nature and extent of the disability and the wages earned. This determination by legislative enactment is reposed in the workmen’s compensation department. Justice Wiest stated the proposition thus :
“We do not weigh the evidence. The weighing-scale is in other hands and, even if we think it ont of balance, we cannot re-weigh.”
We properly do prescribe and have prescribed the statutory interpretation of “wage-earning capacity.” It appears in Hood, supra, and it was quoted with approval in Pique v. General Motors Corporation, 317 Mich 311, at pp 316, 317:
“ What is meant by the term “wage-earning capacity after the injury?” It is not limited to wages actually earned after injury, for such a holding would encourage malingering and compensation is not a pension. On the other hand mere capacity to earn wages, if “nondescript” by reason of injury, affords no measure unless accompanied by opportunity to obtain suitable employment. Opportunity is circumscribed by capacity of the injured and openings to such a wage earner.’ ”
Under the foregoing rule, the appeal board found as follows:
“On May 27, 1957, this employer manifested commendable concern over plaintiff’s misfortune and offered him a clerical job in its planning and scheduling department. This was a regularly recognised occupation and not made work.” (Emphasis supplied.)
The following excerpt from the record describes the work in question:
“Q. And what exactly was he performing?
“A. In the automobile business you ship parts to automobile assembly plants all over the United States. His job was to record those shipments by assembly plants on our records so that we would know whether we were up to schedule with our customers or not.
“Q. I see. Is that a necessary function of your department?
“A. Very necessary.”
We cannot, under such record, disturb' the finding of the appeal board that the work appellant was performing was “a regularly recognized occupation and not made work.” This wording, it'would seem, may have been used in the finding by reason of the language of Mr. Justice Fead in Markey v. SS. Peter & Paul’s Parish, 281 Mich 292, at pages 299, 300:
“When an employee accepts work and receives wages therefor in a recognized regular employment, with the ordinary conditions of permanency, as here, there is no room for argument that-he has not thereby established a present earning capacity equal to such wages, whatever may be his physical condition.”
Thus, while appellant was so employed- and his wages were equal to or greater than those received at the time of his injury, which is not disputed, he was not entitled to compensation benefits.
It is undisputed that he left his work of his. own volition. His counsel argues with commendable vigor that to hold that he had to remain in such employment or forfeit his rights under the compensation act “creates nothing less than a form of serfdom or slavery.” We would quickly agree, were the premise correct. We think, in the ardor of his advocacy, counsel overlooks an important point. It was not the fact of his voluntary leaving this employment that resulted in his loss of .compensation benefits. To leave was his prerogative. He was not receiving any benefits at the time he left, nór under the act was he entitled to any. He had established a wage-earning capacity equal to or greater than the wages he was receiving at the time of his ' injury. When he filed an application for additional benefits, he became the moving party and his was the burden of proving that his inability to. obtain employment was the result of his injury and disability. Certainly, because he had established such capacity did not operate to foreclose him forever from further benefits. As we said in MacDonald v. Great Lakes Steel Corporation, 274 Mich 701, at p 703:
“The actual earning of wages establishes an earning capacity * * * that, prima facie, such earning capacity continues after the discharge of the employee from the employment in which the wages are earned and that the burden of showing a change of earning capacity when the employment ceases (in order to reinstate the original award or to decrease the setoff against it) is upon the employee. This is merely an application of the rule that the burden of proof of right to compensation * * * is on the employee. The prima facie assumption of continuance of earning capacity is in accord with ordinary human experience and not unfair.
“The ruling does not require the employee to show a change of physical condition after his discharge. Nor does it prevent his showing his actual earning capacity after the employment ceases, as affected by his physical condition, his ability to toork, the market for his labor and other pertinent circumstances.” (Emphasis supplied.)
The foregoing certainly applies, with at least equal force, to the case where the employee leaves the involved work voluntarily as it does to the case where the employee is discharged or the work ceases.
The question therefore becomes what proof did appellant introduce as to his actual earning capacity at the hearing before the referee? We agree at the outset with appellant’s counsel that there is no testimony to support the conclusion of the appeal board that plaintiff would have been able to return to his punch press job despite his injury. The only testimony on the point available to us is to the con trary, namely, that the operation of a punch press requires two hands. Were this point controlling, we would perforce vacate the finding of the appeal board as having no testimonial support. However, the test is not whether appellant could again operate a punch press and earn the same wages he did at the time of his injury. To so hold would read out of the statute the unequivocal and clear language:
“The compensation payable, when added to his wage earning capacity after the injury in the same or another employment, shall not exceed his average weekly earnings at the time of such injury.”
What proof then did plaintiff-appellant submit of his “actual earning capacity after the employment ceases, as affected by his physical condition, his ability to work, the market for his labor and other pertinent circumstances.” MacDonald, supra. Regrettably, there is little, if any, direct testimony on the point. Appellant testified that he lost his job in Tennessee because his employer “didn’t have as much business as they thought they had when they hired me.” The loss is in no way related testimonially to his disabling injury. It is conceded that after his return to Detroit he sought work from no one save his former employer. It is not disputed that he was not rehired by that employer for any reason other than lack of work. When questioned as to the reason he didn’t look for other work in Detroit, appellant stated:
“Well, I looked so much down in Tennessee, then I have no luck there, nobody never did have nothing for me to do down there, so I just figured I couldn’t get nothing up here. I got tired of filling out applications and looking for work.”
Upon questioning by the hearing referee, appellant testified that, in Tennessee, he “was looking for anything, it didn’t matter .what, just so I got a job.” He further testified he so stated to employment agencies through which he sought work. Giving this testimony its most generous interpretation in behalf of one admittedly cruelly crippled in an industrial accident, the best that might be said for it is that it could support an inference by the finder of the facts that the fruitless quest for work was the result of the disability. Such was not the interpretation placed thereon by the appeal board. Contrariwise, the board preempts such an inference of fact by making the following specific finding:
“Plaintiff has offered no proof whatever of having been rejected for work by any prospective employer because of work limitation attributable to his injury.”
This, coupled with the fact that the appellant established a post-injury wage-earning capacity, in a regularly recognized occupation and not in made work, in excess of his average weekly wage at the time of injury, seals off our area of review.
Appellant’s case fails for want or proof of having been rejected for work by any prospective employer because of work limitation attributable to his injury.
Affirmed. Costs to the appellee.
T. M. Kavanagh, C. J., and Dethmers, Kelly, Black, Souris, Smith, and Adams, JJ., concurred.
1 Mich App 346,
See OL 1948, § 413.12 (Stat Ann 1960 Key § 17.186).
PA 1912 (1st Ex Sess), No 10, as amended (CL 1948 and CLS 1961, §§ 411.1-43 7.14a, as last amended by PA 1965, No 44 (Stat Ann 1960 Rey and Stat Ann 1965 Cum Supp §§ 17.141-17.230(4)]).
CL 1948, § 412.11 (Stat Ann 1960 Rev § 17.161).
Hood v. Wyandotte Oil & Fat Co., 272 Mich 190, at p 194.
CL 1948, § 412.11 (Stat Ann 1960 Bev § 17.161). | [
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Wiest, J.
While plaintiff was in the employ of the C. F. Hanks Coal Company, delivering coal at a compensation of 60 cents per ton, and earning an average of - $5.28 per day, he met with an accident at a railroad crossing, resulting in the loss of his left leg about five inches below the knee. The accident was reported by the employer. While plaintiff was in a hospital a representative of the employer’s insurance carrier visited him and informed him that $2,000 could be procured from the railroad company for causing the injury, or he could claim compensation from his employer and obtain $2,250 for loss of a foot, payable in weekly instalments, and he claims he was advised by the representative that, if he accepted the $2,000 from the railroad company, the insurance company would make up the difference between that amount and what he would be entitled to under the compensation law.
The sum of $2,250, mentioned to plaintiff, as compensation for loss in his case, was wrong in fact for the leg was amputated below the knee and within a fraction of an inch above the point constituting it a loss of the foot and, therefore, was a loss of the leg and, for loss of the leg, compensation would be more.
After receiving the $2,000 from the railroad company plaintiff filed application for compensation from his employer and, upon a hearing before a deputy commissioner, his application was denied, evidently on the ground that he had elected to have damages from a third party. Upon appeal to the board he was awarded full compensation, less the $2,000 paid him by the, railroad company. The board, in an opinion, found that plaintiff accepted the sum from the railroad company under assurance that it would not prevent him from having additional compensation from his employer, and held that such assurance prevented application of the statutory rule otherwise following an election to have remedy against the third party causing the injury. This presents the important issue of law.
The board found a fraud was practiced upon plaintiff and this presents the question of whether the board can declare an election, otherwise valid, to be no election because of fraud.
The compensation law of the State provides:
“Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect .thereof, the employee may at his option proceed either at law against that person to recover damages, or against the employer for compensation under this act, but not against both, and if compensation be paid under this act the employer may enforce for his benefit or for that of the insurance company carrying such risk, or the commissioner of insurance, as the case may be, the liability of such other person.” 2 Comp. Laws 1929, § 8454.
The compensation act is in derogation of the common law and, therefore, its measure of relief may not be extended beyond its express terms; it is a legislative creation permitting no enlargement by principles of equity or common-law adaptations. It is arbitrary and where it speaks nothing can be added nor changed by judicial pronouncement. It imposes liability upon operatives under its provisions and measures exclusive relief in its own terms. This law permits an employee, injured in the course of his employment by the negligence of a third party, to have compensation from his employer or from the third party, but not from both. The employee may elect his remedy but cannot, even by agreement with the employer, have remedy in part from the third party for a tort and in part against his employer under the compensation act. The remedy against the third party is at common law, and that under the compensation act wholly foreign to the common law. The two laws bear no relation and their remedies cannot be mixed, except by express statutory authority. Eemedy had under one wholly excludes the employee from the other.
The statutes of some States permit proceedings against both the employer and the negligent third person but double recovery is not permitted.
The payment by the railroad company and the release given by plaintiff, perhaps, do not, standing alone, show circumstances creating a legal liability of the railroad company, but the settlement assumed the existence of such a legal liability and in this proceeding plaintiff must be held to have received the $2,000 in satisfaction of a valid claim for damages.
Cases from other jurisdictions, sanctioning what was here done, may be found but such decisions are based upon statutes expressly authorizing such procedure and adjustment of compensation. See Napier v. John P. Gorman Coal Co., 242 Ky. 127 (45 S. W. [2d] 1064).
Our statute is rigid on the subject; permits an election; attaches consequences by expressly pro hibiting both damages from a wrongdoer and compensation from an employer, thus keeping tort liability and contract responsibility within their proper spheres.
If plaintiff was induced by false representations to elect to have damages from the third party, his remedy, if any, is not within the compass of the compensation act.
The award is vacated, with costs to defendant.
Nelson Shárpe, C. J., and Potter, North, Fead, Butzel, and Edward M. Sharpe, JJ., concurred. Bushnell, J., did not sit. | [
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Wiest, J.
Defendant Bolibrzuch had a judgment against plaintiff for upward of $7,000. Thereupon one Clifford Dinus sued Bolibrzuch and served a writ of garnishment upon plaintiff. Plaintiff made disclosure of the judgment indebtedness. Boli brzuch took out execution upon his judgment, levied upon plaintiff’s property, and purchased the same at sheriff’s sale. Plaintiff, in order to redeem, paid the sale price to the register of deeds, and then filed the bill herein to restrain the register of deeds from paying the redemption money to Bolibrzuch and the latter from attempting to collect the money as she wanted to be protected under the Dinus writ of garnishment. Suit by Dinus resulted in a judgment for defendant, followed by an appeal now pending in this court. Upon judgment against Dinus of no cause of action against Bolibrzuch, the latter moved the court to dissolve the injunction restraint imposed at the instance of plaintiff. The court held that failure of Dinus to obtain judgment against Bolibrzuch discharged the garnishment proceeding against plaintiff and dismissed her bill.
Plaintiff prosecutes an appeal, presenting the question of whether a writ of garnishment survives failure to obtain judgment against the principal defendant and maintains the status quo pending-disposal of a perfected appeal.
The circuit judge held that, under the following statutory provision, the garnishment proceeding ended with failure of plaintiff in that suit to obtain judgment:
“A failure to recover judgment against- the principal defendant, or a satisfaction of such judgment, in any manner, shall be deemed a discontinuance of all proceedings against the garnishee.” 3 Comp. Laws 1929, § 14897.
May it be said that an unsuccessful endeavor at nisi prius is such a failure to recover judgment as falls within the mentioned statute, or should it be said that, as long as the suit remains a live judicial proceeding, there is as yet no failure to recover judgment?
Counsel for defendant injects much of the Dinus case into his argument hut this we cannot consider. Even if there is merit in the claims made it cannot be taken up here for there has been no hearing on plaintiff’s bill.
The court was in error in holding that the failure of Dinus to obtain judgment against Bolibrzuch in the circuit court and with an appeal duly taken discharged the garnishment proceeding against plaintiff. Plaintiff, by her bill, merely sought to have matters held without prejudice to her rights, pending determination of whether, as judgment debtor of Bolibrzuch, he should be paid or whether she should respond to Dinus under the writ of garnishment.
The decree dismissing the bill is reversed and the cause remanded to the circuit court, with costs to plaintiff.
Nelson Sharpe, O. J., and Potter, North, Fead, Butzel, Bushnell, and Edward M. Sharpe, JJ., concurred. | [
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Btjtzel, J.
In 1928, Bose Albert, defendant, acting through a real estate agent, signed an instrument appointing the Investment Mortgage Company her agent to secure a mortgage loan of $20,000 on an apartment building in Detroit. She agreed to pay the mortgage company for its services a commission or brokerage fee of six per cent., in addition to the cost of recording and continuing abstract, and other expenses incurred in perfecting title. The loan was negotiated, and defendant executed a note and mortgage for $20,000 running to plaintiff, Peter Patterson, as mortgagee. Patterson is the secretary and treasurer of the company, and owns most of its stock. He also keeps a part of his funds in the company’s account, the amount being indicated on the books of the company. According to the testimony, these funds were used to make the loan. The transaction was closed at the office of the mortgage company, where Patterson also had his office. The company issued to defendant a check, signed by plaintiff as treasurer, for the amount of the mortgage loan, less a $1,200 commission retained by the company and other expenditures authorized by the defendant. The mortgage was dated December 13, 1928, ran for three years, and provided for the payment of semi-annual instalments of interest at the rate of six per cent, per annum. It also contained a clause accelerating the payment of the entire balance due, in case of default in the performance of any of the covenants of the mortgage. On July 22,1931, before the mortgage fell due, plaintiff, without exacting any brokerage fee, granted defendant an extension of the loan for three years from December 1, 1931. The extension agreement provided for semi-annual payments- of $200 on the principal beginning December 1, 1931, and the continuation of interest in accordance with the mortgage. Although the instrument is rather crudely drawn, it provides that all of the terms and conditions of the note and mortgage should “remain as heretofore.”
Defendant defaulted in the payment of both the principal and interest due on December 1, 1931, and the principal due on March 1, 1932, and plaintiff thereupon brought the present foreclosure proceedings. Defendant contends that the entire transaction was usurious, and that, therefore, she is. excused from, paying any interest, and is entitled to have deducted from the face amount of the mortgage and note all payments made by her thus far; that for this reason there is no default, and plaintiff is, consequently, not entitled to foreclosure. The circuit court commissioner, before whom testimony was taken, found the transaction free from usury. His report was confirmed by the circuit court, and a decree of foreclosure entered. Defendant appeals from this decree.
The fact that the mortgage company was designated by defendant in the application as her agent to secure the loan is not at all conclusive. The borrower is frequently required to sign such an application merely for the purpose of evading the usury law (2 Comp. Laws 1929, § 9239 et seq.). The court will examine the entire transaction in order to determine the question of agency. Olmsted v. New England Mortgage Security Co., 11 Neb. 487 (9 N. W. 650); Dupree v. Virgil R. Coss Mortgage Co., 167 Ark. 18, 33 (267 S. W. 586, 1119); Dayton v. Dearholt, 85 Wis. 151 (55 N. W. 147).
In the instant case Patterson, the lender, kept' his funds with the mortgage company for investment. The latter acted as his agent in making the loan, and exacted the usury with his full knowledge and consent. Under the circumstances, the lender is. chargeable with ukury. Umphrey v. Auyer, 208 Mich. 276; Freedman v. Katz, 246 Mich. 296. Also, see 21 A. L. R. p. 850, and cases cited.
The whole transaction was a palpable subterfuge to extort usury. The Investment Mortgage Company is not an independent loan broker in which Patterson has no interest (Merck v. American Freehold Land Mortgage Co., 79 Ga. 213 [7 S. E. 265]), nor is it a corporation in which his only interest is that of a stockholder, 21 A. L. R. 863. By his own admission, Patterson owns almost all’ the stock of the company. In addition,, he is the secretary and treasurer, and in that capacity acted for the com pany throughout the instant transaction. The testimony does not show that any other officer or representative of the company played any part in the transaction, with the exception of a loan clerk who took care of the details. In practical effect, Patterson had himself appointed loan agent of the borrower in order to obtain a commission for procuring a loan for himself. Inasmuch as the transaction is tainted with usury, plaintiff is entitled only to $18,800, the amount actually paid out by the mortgage company, less the five instalments of $600 each paid as interest. Plaintiff is entitled to interest only from the date of the decree rendered by the lower court at the legal rate of five per cent, per annum.
Defendant claims that since the transaction was usurious, not only is plaintiff precluded from recovering any interest whatever, but in addition the semiannual payments of $200 on the principal, provided for by the extension agreement, should be deemed satisfied by the application of the $1,200 bonus and the interest payments made by defendant; that she is therefore not in default in any respect, and that the mortgage should therefore run without interest for the remainder of the three-year period provided in the extension agreement. Accepting defendant’s construction of the extension agreement as being tainted with usury, we find that plaintiff’s promise to forbear for three years was without consideration, and cannot be enforced. Peoples Wayne County Bank v. Lonyo, 255 Mich. 481. In Church v. Maloy, 70 N. Y. 63, a somewhat similar situation arose. The New York court held that inasmuch as the borrower had disaffirmed the extension agreement to the extent of insisting that the consideration paid was usurious and should be credited on the mortgage, he was not entitled to the benefit of the extension after receipt’ of such credit. Also, see, Morgan v. Wickliffe, 110 Ky. 215 (61 S. W. 13); 22 Ky. L. 1648 (61 S. W. 1017). Defendant, having set up the claim of usury in order to avoid payment of the interest which was the agreed consideration for plaintiff’s promise to forbear, cannot now demand that plaintiff perform his part of the agreement. Defendant is not entitled to the benefit of the extension, and the mortgage is therefore due in the amount above determined, with interest at five per cent, from the date of the original decree.
The decree of the lower court is modified and the case remanded with instructions to amend the decree in accordance with this opinion. Defendant will recover costs.
Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, Bushnell, and Edward M. Shárpe, JJ., concurred. | [
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Edward M. Sharpe, J.
March 16, 1927, plaintiffs sold to one Blatny certain premises on land contract for the snm of $2,200 with nothing paid down. In June, 1928, Blatny made an application for a loan on the property from defendant company. The loan was approved in the snm of $5,500, the purpose being to construct a two-family house on the premises. August 28, 1928, Blatny and wife executed the mortgage to defendant and the same was recorded August 29,1928, although at this time no money was paid to Blatny.
Prior to this time plaintiffs had loaned various sums of money to Blatny and had sold him some furniture, and on September 24, 1928, plaintiffs and Blatny agreed that the total indebtedness owing to plaintiffs by Blatny was the sum of $3,184.50. On September 24, 1928, plaintiffs and Blatny met in the office of defendant company and as a result of a conference it was agreed that the defendant company was to pay plaintiffs the sum of $1,140.50, no part of which went into the construction of the building. On September 24, 1928, Blatny and wife executed a mortgage to plaintiffs for the balance of the latter’s claim in the sum of $2,044. At this time plaintiffs delivered to Blatny a warranty deed of the property. Blatny and wife on the same day conveyed their interest in the property by warranty deed to C. W. Baymoure. This deed was recorded October 9, 1928. The mortgage from Blatny to plaintiffs was recorded September 27, 1928. The deed to Baymoure recites that it is subject to a mortgage of $5,500 to defendant company and a second mortgage for $2,044 to plaintiffs.
Blatny proceeded to erect the building and defendant made advances to practically the full amount of its mortgage. When the mortgage from Blatny to defendant became in default, the latter proceeded to foreclose and on April 22, 1929, bid in the property at sheriff’s sale for the amount of its debt. The sheriff’s deed was recorded April 26, 1929.
Raymoure, who had held the legal title of the property since September 24, 1928, wishing to refinance the mortgage, appealed to defendant for a new mortgage loan. This loan was approved in the sum of $5,500 and on October 9, 1929, the mortgage was executed and on January 17,1930, was recorded. After the execution of this mortgage the defendant had an investigation of title made by the Burton Abstract & Title Company, who reported that title could be insured in Raymoure as mortgagor by a discharge of the plaintiffs’ mortgage and redemption by Raymoure of the sheriff’s deed to defendant. The defendant gave Raymoure a quitclaim deed on January 17, 1930, which was recorded January 22, 1930. Instead of securing a discharge of plaintiffs’ mortgage, Raymoure secured the following subordination agreement:
“October 7, 1929.
“Detroit, Michigan.
“Recorded Jan. 22,-1930, at 2:30 p. m.
“Otto Stoll, Register.
“The undersigned, John Levitz and Adele Levitz, husband and wife, are the holders of a certain mort-' gage, in the amount of $2,044, dated September 24, 1928, and recorded September 27, 1928, in liber 2211 page 562 of mortgages in the office of the register of deeds, Wayne county, Michigan, which said mortgage was made by John Blatny and Paulina Blatny, husband and wife, of Detroit, Wayne county, Michigan, as mortgagors and John Levitz and Adele Levitz, husband and wife, of the same place, as mortgagees. Said mortgage covers property known and described as:
“Lot 9 Mayflower subdivision of part of northeast % of northeast % of section 9, town 1, south range 12 east, according to the plat thereof as recorded in liber 41 on page 6 of plats.
“The undersigned, for and in consideration of one dollar and other valuable consideration, the receipt whereof is hereby confessed and acknowledged, hereby agrees to and with the Capitol Savings & Loan Company, a Michigan corporation, of Lansing, Michigan, that it may take a first mortgage on said property, in the amount of $5,500.
‘ ‘ The undersigned agrees that said first mortgage of said Capitol Savings & Loan Company shall and will constitute a lien on said property prior to the mortgage lien of the undersigned thereon.
“(Signed) John Levitz
‘ ‘ (Signed) Adele Levitz. ’ ’
(Witnessed and acknowledged.)
At the time the above agreement was signed, Raymoure promised plaintiffs that he would assume and pay the amount still owing plaintiffs. Raymoure later did make a few payments to plaintiffs. Upon default in the Raymoure mortgage, the same was foreclosed by advertisement and sold at sheriff’s sale on August 17, 1931, for $5,519.92, and deed issued to defendant company. A few days before the date of this sale and on July 30,1931, plaintiffs filed a bill of complaint to have their mortgage declared to be a first lien on the premises involved. Plaintiffs alleged that the subordination agreement was obtained by fraud and misrepresentation on the part of Raymoure and further that there was no consideration for such agreement, denying' the receipt of the dollar recited in the instrument or of any other consideration. The lower court held that plaintiffs ’ mortgage should be a prior lien upon the premises except to the extent that defendant had furnished consideration by giving up its right to possession of the premises, the measure of defendant’s lien being the fair rental value of the premises during the period defendant was delayed in taking possession. Defendant appealed and plaintiffs filed a cross-appeal claiming a prior lien to the full amount of their mortgage and that defendant was entitled to no credit whatsoever for the rental value of the property.
We think that the only question involved is the validity of the subordination agreement.
Plaintiff claims fraud as one of the reasons for invalidating the agreement. However, there is no proof in the record that would substantiate fraud. When Raymoure secured plaintiffs’ signature to the subordination agreement, plaintiffs were told that he wanted to get Blatny’s name off the property and that Raymoure would assume and pay Blatny’s mortgage indebtedness. Such statements do not constitute fraud. The first statement was true and the second statement was a mere promise to do something in the future, a part of which was carried out by Raymoure. We also think plaintiffs were somewhat negligent in failing to read the agreement or have someone read it to them.
A subordination agreement is valid when based on a valuable consideration. 1 Jones, Mortgages (8th Ed.), 1105; Wayne International Building & Loan Ass’n v. Moats, 149 Ind. 123 (48 N. E. 793); Fudickar v. Monroe Athletic Club, 49 La. Ann. 1457 (22 South. 381); Mutual Life Ins. Co. of New York v. Sturges, 33 N. J. Eq. 328; Frost v. Yonkers Savings Bank, 70 N. Y. 553 (26 Am. Rep. 627); Clason v. Shepherd, 6 Wis. 369; Grunert v. Becker, 100 Mich. 50; Shapero v. Picard, 235 Mich. 481.
The consideration necessary to support a contract is a “benefit to the promisor or a detriment to the promisee.” 1 Williston, Contracts, §102; Sanford v. Huxford, 32 Mich. 313, 315 (20 Am. Rep. 647); Smith v. Maxey, 186 Mich. 151, 165; Steep v. Harpham, 241 Mich. 652, 656.
Prior to the execution of the subordination agreement on October 7, 1929, the defendant had foreclosed the Blatny mortgage and in the absence of redemption would have the right of possession on April 22, 1930. This right was surrendered when defendant executed a quitclaim deed of the property to Eaymoure for the purpose of making redemption of the Blatny mortgage. After the execution of the subordination agreement, the defendant lost all recourse on the guaranty of the Union Title & Guaranty Company, which had guaranteed the Blatny mortgage to be a first mortgage on the premises. In addition to these detriments to defendant, there was a benefit to plaintiffs in that plaintiffs secured Eaymoure’s promise to pay the principal and interest on the Levitz mortgage, a part of which promise was carried out by Eaymoure. That this consideration to plaintiffs moved from Eaymoure, a third party, rather than from the defendant, is immaterial. Londner v. Perlman, 129 App. Div. 93 (113 N. Y. Supp. 420). It is not necessary that there be an equal exchange of consideration. The law does not inquire into the adequacy of the consideration. 1 Williston, Contracts, § 115. It is enough if the consideration is given, in whole or in part, in exchange for the promise.
The decree of the trial court is reversed and plaintiff’s bill of complaint dismissed. Defendant may have costs.
Nelson Sharpe, C. J., and Potter, North, Fead, Wiest, and Butzel, JJ., concurred. Bttshnell, J. did not sit. | [
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Wiest, J.
This is an appeal by defendant from a judgment in favor of plaintiff for the conversion of certain first mortgage serial gold bonds of the Tuller Hotel Company.
Plaintiff’s brother, in 1926, while vice-president of defendant bank, purchased the bonds from the bank in behalf of plaintiff. The bonds were payable to bearer and were kept by plaintiff for a time in a bank in Coopersville. In 1929, the bonds were in default for nonpayment of interest and plaintiff delivered them to her brother to take care of. The brother delivered the bonds to the cashier of de fendant bank, who knew they belonged to plaintiff, and he forwarded them, along with like bonds held by the bank, to the Detroit Trust Company, which sent three payments of interest thereon, and then the bonds were deposited with a bondholders’ committee for mortgage foreclosure purposes, and a certificate sent to plaintiff, which she returned.
Plaintiff did not, expressly or impliedly, authorize such deposit of her bonds, and demanded return thereof by defendant. The bonds had been placed beyond the power of defendant to make return thereof, and this suit for conversion followed.
The situation is disclosed in a letter, written by the cashier of defendant bank to plaintiff and dated October 5, 1932:
“When these bonds, and other bonds owned by customers and placed in safekeeping here, went into default, it was our custom to direct the Detroit Trust Company to deposit them in all cases. In your case, as with others, if we had not done that, your bonds would be left out of the benefits derived from the foreclosure. As custodians of the bonds you would have criticized us if we had not looked after your interest in this matter as we did with other customers. But there is the further fact. Namely, that it is only by united action of bondholders through a committee that any action can be taken to protect their interest. In this case immediate action was necessary. That is the reason your bonds were deposited.
“Now the question is what you want done about it and if we have convinced you that this action was the proper one. We know that if you had been consulted at the time you would have ordered the deposit made. We know that we should have done as we did do. But we cannot show any instructions from' you in régard to' it. Owning bonds in this issue and depositing ours and leaving yours out, when you had bought some of them from us, would look very bad, since you had left them with us. We will await your further report. ’ ’
Defendant, in depositing the bonds with the bondholders’ committee, devoted them to an unauthorized use, with full knowledge that they belonged to plaintiff, but acted in good faith, believing it for the best interest of plaintiff to do so.
Want of authority in the premises, and not action considered for the best interest of plaintiff, determines defendant’s liability.
The market value of the bonds at the time of demand and failure to return them was shown.
Judgment is affirmed, with costs to plaintiff.
Nelson Sharpe, C. J., and Potter, North, Fead, 'Butzel, Bttshnell, and Edward M. Sharpe, JJ., concurred. | [
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Reid, J.
This action was before this Court on a former appeal, F. M. Sibley Lumber Co. v. Schultz, 297 Mich. 206, in which the claims of the parties appear. The question of implied warranty was properly submitted on the second trial. The jury allowed items of credit for plaintiff of $16,089.37, and damages to Schultz, defendant and cross plaintiff, of $7,797.11, leaving a balance of $8,292.26, with interest of $2,178.33, a total of $10,470.59 balance due plaintiff.
Defendant Schultz claims numerous errors, one being that the court did not submit to the jury his third requested question:
“Was plywood1 delivered to the site on May 6, 1937, reasonably fit to be used as liner for forms to hold wet concrete ? ” *
The court considered an answer would not be conclusive and submitted the following five questions to the jury, questions 1 and 2 being prepared by defendant and questions 3, 4 and 5 by the court:
“1. Was the particular purpose for which the concrete form plywood, ordered March 15, 1937, and delivered May 6,1937 by freight car, was to be used made known to the P. M. Sibley Lumber Company, a Michigan corporation, by information given to Ernest Edge, its salesman, or Harry H. Berger, its secretary and treasurer?” (Jury’s answer yes.)
“2. In placing the order for the carload of concrete form plywood with the P. M. Sibley Lumber Company, did the purchaser Robert J. Schultz rely on the skill or judgment of the P. M. Sibley Lumber Company?” (Jury’s answer yes.)
“3. Did Mr. Lightfoot specify to Mr. Edge the exact material he wanted, and did Mr. Edge merely procure the exact material he was ordered to?” (Jury’s answer yes.)
“4. Did Mr. Lightfoot say in effect to Mr. Edge: We are figuring to get four uses from plywood as a concrete form lining, and we rely on your company to get us'plywood that will give us four such uses?” (Jury’s answer no.)
“5. Did the Sibley Lumber Company in effect undertake to furnish Mr. Schultz plywood as concrete form lining that would give four uses?” (Jury’s answer no.)
The judge on motion for judgment non obstante veredicto considered the answers to the five questions taken together did not warrant any reduction from the full claim of the plaintiff and entered judgment for plaintiff for $20,312.82, evidently including interest.
The question of express warranty was eliminated in our former opinion, was negatived by the testimony on the second trial, and requires no further consideration.
We must consider the question of implied warranty, the manner of its submission to the jury, and the effect of the answers to the special questions, and determine the defendant’s claims of error.
Defendant contended that he did not assert an implied warranty of four uses but of reasonable fitness. Following are excerpts from the testimony of defendant Schultz and his buyer Lightfoot, on whose testimony the claim of cross plaintiff of implied warranty must in effect depend:
(Lightfoot) “I called Mr. Edge (plaintiff’s salesman). * * * I had literature (exhibit 17 quoted in cited decision, supra) that had been given me by other salesmen on concrete form plywood and we talked about it. * * * We sat down side by side and read it because it was new to him and it was new to me. * * # Mr. Edge stated that the material would have at least four re-uses. * * * Mr. Edge said he was sure we would be able to get at least four re-uses out of it.”
(Schultz) “Ernest Edge told me on the evening of March 13,1937, that I would get four re-uses and some salvage value out of the concrete form plywood. * * * We anticipated using it four times.”
This testimony was denied.
The answers of the jury to questions 4 and 5 find the above-quoted testimony incorrect.
Mr. Lightfoot further testified:
“The date on which Mr. Edge and I looked at page 9 of exhibit 17 was March 13, 1937. Mr. Edge at that time stated that that material was standard material used for concrete form lining and I asked him if it was the same material that was specified, that they referred to as specially fabricated and he said ‘yes,’ it was standard material furnished by all lumber companies. He said there was no question but what the F. M. Sibley Lumber Company could furnish the quality, but there was some question about the special 21-inch width size; and he stated it would be necessary for him to go back to the office and inquire as to whether it could be obtained from the mill they were dealing with, because of the special size.
“Next day he called me up and told me what the price was and that they could supply it. * * * Exhibit 5, our purchase order No. 152, was not requested by Mr. Edge. He had1 turned in a memorandum of the order to Mr. Berger (of the F. M. Sibley Lumber Company) and Mr. Berger called me and asked me to confirm. * * * I asked him •what he wanted me. to call it and he said, ‘ Just call it plywood.’ ”
The answer by the jury to- question 3 weighs such statements with opposing testimony and determines that the sale was ■ by description without implied warranty.
The answer to question 1 in itself would not constitute a reason for finding an implied warranty. Necessary elements are wanting. Question 2 is vague and fails to specify in what particular and to what extent Schultz relied on the skill and judgment of plaintiff.
Defendant claims that the judgment and verdict are against the great weight of the evidence. It will be noted that his witness Lightfoot said this use of plywood was new to him and to Mr. Edge. It is hard to believe Lightfoot’s further statements that Edge recommended the material for that new and therefore untried use.'
Mr. Edge testified:
“Q. * * * What, if anything, did you say to Mr. Lightfoot when he informed you that the architect would not permit the use of masonite and that he would have to use concrete form plywood?
“A. I told him not to ask me about concrete form plywood, I didn’t know anything about it.
“Q. And what further, if anything, did Mr. Lightfoot say?
“A. He told me I did not need to know that they knew what they wanted.”
The jury could well have found that the manufacturer, West Coast Plywood Company, was informed by the F. M. Sibley Lumber Company’s order, through intermediaries, of the intended use; that Lightfoot had received from agents of bidders other than Edge the manufacturer’s literature (ex-. Mbit 17) representing’ tbe suitability of tbeir product for several uses; tbat defendant obtained tbrougb plaintiff a carload of tbat same manufacturer’s product, tbe very thing tbat defendant bad in. mind1 when plaintiff was given tbe order; and tbat defendant without asking any questions (as it seems) accepted tbe latently deficient carload.
All tbe testimony is to tbe effect tbat tbe plywood furnished was not reasonably fit for tbe intended use, but with a finding of no implied warranty, it would be useless for tbe jury to answer the third question as proposed by defendant. He could gain nothing by tbe answer. In bis charge tbe court said1:
“It is coneeded'that none of tbe plywood tbat was delivered by tbe F. M. Sibley Lumber Company to Mr. Schultz gave more than two uses. So, if there was an implied warranty, there is no question about its breach.”
Defendant complains tbat tbe court did not make a sufficiently detailed charge to tbe jury respecting tbe three phases of implied warranty set forth in subsections (1), (2) and (5) of 2 Comp. Laws 1929, § 9454 (Stat. Ann. § 19.255), relied upon by tbe defendant. Defense testimony in full was received on all these matters. Subsections (1) and1 (2) were read and properly explained to tbe jury. Tbe jury were required to answer tbe questions of fact and were sufficiently and appropriately instructed as to tbeir consideration of those facts.
It is clearly evident tbat tbe use 'of plywood”to line forms to bold wet concrete was new to tbe trade in 1937. It was conceded tbat plywood was not then being marked as to grade. Evidently tbe jury could properly find tbat defendant Schultz took bis chances with tbe use of plywood from a company whose circular his agent Lightfoot had read, simply assuming that the product of that company would be suitable for the purpose intended but later experience has demonstrated how plywood requires to be prepared for that purpose, with what glue and of what particular consistency and1 with what pressure in the process of manufacture.
As to subsection (5), supra, there was no implied warranty by usage of trade as to this particular use of plywood in 1937. Such usage of trade was neither pleaded nor proved.
The jury was well within the bounds of the testimony in answering “yes” to question 3 and “no” to questions 4 and 5. Such answers are not against the weight of the evidence. The verdict being against implied warranty, it is unnecessary to consider claimed errors in rulings upon offered items under the cross declaration.
Judgment affirmed, with costs of both courts to plaintiff.
North, C. J., and Starr, Wiest, Butzel, Bushnell, Sharpe, and Boyles, JJ., concurred. | [
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Butzel, J.
For a statement of tbe facts leading up to tbe instant case, see Fidelity & Casualty Company of New York v. Vantaggi, 300 Micb. 528. Ray Laska, an employee of. defendant, suffered a compensable injury wbicb be reported to defendant’s foreman. Defendant claimed that be was never informed of tbe injury until Laska filed bis application for compensation with tbe department of labor and industry. Had tbe employer been informed by tbe foreman, it would have been a very simple matter for him to notify plaintiff and thereupon tbe employer’s liability would have been assumed by plaintiff, tbe insurer. While it seems improbable that tbe employer would not have notified tbe plaintiff insurer of tbe accident, bad tbe employer himself learned of it, nevertheless we bold that notice to tbe foreman was notice to tbe employer. Tbe policy did not provide for tbe contingency of tbe insurer being still liable if tbe employer personally did not learn of tbe accident and, therefore, did not give tbe required notice. We cannot reform tbe policy and, according to its strict terms, tbe insurance company was entitled to notice when tbe employer through bis foreman, bis alter ego, learned of tbe accident. Plaintiff, as insurer, was entitled to prompt notice of tbe accident. After giving notice to defendant that plaintiff would hold him responsible for any loss it suffered because of the failure to give prompt notice, plaintiff defended the Laska claim. The department held that Laska had given sufficient notice and he was awarded compensation. • Thereupon, plaintiff insurer, in addition to making back payments, entered into an agreement to redeem liability by lump-sum settlement. The agreement was approved by the department and was satisfied by the payment of $1,600 to Laska. Plaintiff thereupon instituted suit against Yantaggi, the employer. On appeal, we held in 300 Mieh. 528, that the finding of the department as to notice was res judicata of that question. The payment of the lump sum by the insurer would not bar it from recovering from the employer because of breach of contract as to notice. 2 Comp. Laws 1929, § 8438, as amended by Act No. 148, Pub. Acts 1935 (Comp. Laws Supp. 1940, § 8438, Stat. Ann. §17.172). We'held, however,, that the carrier of workmen’s compensation insurance, being a paid insurer, could only recover such damages as it actually suffered because of the failure to give prompt notice as required in the policy. A judgment, therefore, directed against plaintiff was vacated and the cause remanded for a new trial in accordance with the opinion. The case was retried and resulted in a verdict in defendant’s favor. The case is here again on appeal.
In the opinion of the department on hearing on review, it is stated:
“ Prior to the accident, plaintiff had no difficulty whatsoever with his back and was able to do any and all types of manual labor. Following the accident he has not only been constantly troubled with his back but has also been bothered with a hydrocele and an enlarged left testicle, both of which conditions developed shortly, after the accident. To find that there is no causal connection between the accident and these conditions which are disabling would be to ignore entirely the practical aspect of the situation and to ignore the medical testimony which in the main fairly discloses that the accident could have been the cause of plaintiff’s disability.”
Many questions are raised by plaintiff as appellant. The doctors who testified for plaintiff did not see Laska until several years after the accident. Much confusion arose as to just when the hydrocele developed. One doctor stated that not having seen plaintiff at the time of the accident, he could not tell when it developed, that it might have been congenital. However, the confusion was not brought about by defendant. Plaintiff’s attorney, when questioning the doctor on direct examination, brought out the following testimony:
“Q. How long after in your opinion might a hydrocele develop?
11 A. Well, as to the length of time that may be hard to say or to set a time definitely, but hydroceles may form in a matter of hours to probably days and weeks, as well as months and years. That would all depend upon the size of the hydrocele.”
It can readily be seen that the doctors, in testifying, were giving their independent judgment on the question as to when the' hydrocele developed. At the time they examined Laska, it had grown to the size of an orange.
Further confusion was thrown into the case by the showing that Laska was able to do part-time work for a period of over two years after the accident. Many of plaintiff’s questions may be grouped under the single question as to whether the lower court erred in accepting the testimony of the doctors instead of the opinion of the department that the hydrocele developed shortly after the accident. We believe that plaintiff was largely responsible for injecting the question into the case by the testimony hereinbefore quoted and, therefore, cannot complain of any error. The testimony in regard to back injuries was excluded correctly. The finding of the department was res judicata as between the insurer and the employer. Fidelity & Casualty Company of New York v. Vantaggi, supra; Lumbermen’s Mutual Casualty Co. v. Bissell, 220 Mich. 352 (28 A. L. R. 874).
We do not believe that the errors complained of call for a new trial. Not only was plaintiff partly at faulty but the alleged errors operated against defendant, not against plaintiff. Had the hydrocele been congenital, and plaintiff was not notified immediately, plaintiff would have been the sufferer thereby. Had plaintiff had timely notice, it could have ascertained that the hydrocele was not caused by the accident. Having ascertained it, plaintiff could have readily defended Laska’s claim before the department. The failure to give notice deprived the insurance company of the opportunity of ascertaining whether or not the cause of the hydrocele was congenital or brought about by causes other than the accident. For this reason it could not carry on a successful defense before the department and was, therefore, damaged to that extent. The error, if there was one, strengthened plaintiff’s case. Moreover, the testimony was not entirely certain. It was shown without any question that -had plaintiff learned of the hydrocele a simple operation could have cured Laska in a very few weeks. However, it is noted that the doctors testified in the main in a guarded manner as to what could have been done. When the insurance company, instead of offering this so-called operation to Laska, after learning all of the facts, and thus curing him within a very short time at a minimum of expense, as they claimed they could have done, nevertheless proceeded to agree to a lump-sum settlement, uncertainty was created in the mind of the jury. The inference was proper and very convincing to' a jury that the plaintiff would not have consented to a $1,600 lump-sum settlement had it in any way been convinced of the efficacy of an operation at a minimum of expense. The insurance company’s action’would tend to show that Laska’s case was not one in which it was believed that the operation was advisable. It gave the jury a sound basis for coming to the conclusion that plaintiff was not entitled to recover.
Appellant further claims that the court erred in rejecting testimony to show that Laska worked four days after the injuries. Objection was made by the attorney for the defendant on the grounds that the record also showed that at a still later date Laska worked for a protracted period, and that this fact should also have been included in the question. The purpose of this line of questioning was to show that the injury, originally minor, was aggravated by working and by lack of immediate proper care. The court held that counsel for plaintiff should include all pertinent facts so as to enable the physician to come to his conclusion since he did not see Laska until over two years after the accident. The court did not exclude the question but required that a firm foundation be laid. Evidently the question was abandoned by plaintiff for his attorney did not pursue the subject any further. This was not reversible error.
The charge of the court was fair and the issue was squarely presented to the jury. No fault is found with this charge. In the light of the above determination, the judgment of the lower court is affirmed, with costs to defendant.
Starr, Wiest, Bitshnell, Sharpe, Boyles, and Reid, JJ., concurred with Butzel, J. | [
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Fead, J.
Plaintiff, a Michigan corporation, appeals from assessment for 1933 of the fee imposed under 2 Comp. Laws 1929, §§ 10140, 10143, on every corporation organized or doing business under the laws of the State — “for the privilege of exercising its franchise and of transacting its business within this State.” The fee is payable for the privilege of exer cising the corporate franchise whether it is exercised or not. In computing the fee, “none of the capital or surplus of such corporation represented by property exclusively used in interstate commerce” enters into the computation.
In a former case, involving the fees for 1929 and 1930, plaintiff was held liable. In re Detroit International Bridge Co., 257 Mich. 52, affirmed in Detroit International Bridge Co. v. Corporation Tax Appeal Board, 287 U. S. 295 (53 Sup. Ct. 137). The supreme court of the United States refused to pass upon the contention that the fee violated the commerce clause of the Federal Constitution (article 1, § 8, cl. 3) because plaintiff had not established that it had no power to carry on any business not within the protection of the commerce clause.
Thereupon, in 1933, plaintiff amended its charter to read:
“Article 3.
“The purpose or purposes of this corporation are as follows:
“To operate the highway bridge, known as the Ambassador Bridge, across the Detroit River from Detroit, Michigan, to Sandwich, Province of Ontario, Canada, and the approaches and appurtenances thereto, and to own all or part of said bridge, and approaches and appurtenances thereto.
“To maintain and operate said bridge and approaches and appurtenances thereto for the use of vehicular and pedestrian traffic, and to charge and collect tolls for such use.”
Plaintiff now claims that, under its charter, it can do no intrastate business, its only corporate power is to operate the bridge, such operation is foreign commerce and, therefore, the privilege fee is a burden upon such commerce and contravenes the Federal Constitution.
We need, not inquire whether plaintiff has any intrastate power under statutes regulating domestic corporations. Nor whether maintenance of the bridge is local business. Nor need the multitude of cases dealing with taxation and regulation of interstate and foreign commerce he analyzed or distinguished. In plaintiff’s former case and In re Detroit & Windsor Ferry Co., 232 Mich. 574, where this court held that the fee is not a direct burden on foreign commerce, the fact that the corporations had local powers was not given weight. These cases are determinative upon plaintiff’s liability for the fee.
However, in determining the amount of the fee, the question whether the operation of the bridge is foreign commerce is presented because of the statutory exclusion from the computation of property used exclusively in interstate commerce. In this connection, “interstate commerce” includes foreign commerce. In re Detroit & Windsor Ferry Co., supra.
There can he no doubt that the bridge, if operated by a carrier, would be an instrumentality of foreign commerce. But the question under the statute is whether it is used in such commerce by plaintiff.
Plaintiff conveys no persons or goods across the bridge or international boundary line. It merely collects tolls from such pedestrians or vehicles as use it. It provides an instrumentality which others may use in conducting foreign business.
Plaintiff cites Covington & Cincinnati Bridge Co. v. Kentucky, 154 U. S. 204, 219 (14 Sup. Ct. 1087), as controlling. There, a State law fixing tolls on an interstate bridge was held invalid as a regulation of interstate commerce. The court said, italics ours:
“With reference to the second question, an attempt is made to distinguish a bridge from a ferry boat, and to argue that while the latter is an instrument of interstate commerce, the former is not. Both are, however, vehicles of such commerce, and the fact that one is movable and the other is a fixture makes no difference in the application of the rule. Commerce was defined in Gibbons v. Ogden, 9 Wheat. (22 U. S.) 1, 189, to be ‘intercourse,’ and the thouscmids of people who daily pass and repass over this bridge may be as truly said to be engaged in commerce as if they were shipping cargoes of merchandise from New York to Liverpool. While the bridge company is not itself a common carrier, it affords a highway for such carriage, and a toll upon such bridge is as much a tax upon commerce as a toll upon a turnpike is a tax upon the traffic of such turnpike, or the charges upon a ferry a tax upon the commerce across a river. A tax laid upon those who do the business of common carriers upon a certain bridge is as much a tax upon the commerce of that bridge as if the owner of the bridge were himself a common carrier.”
It will be noted that the tolls constituted a direct burden upon the people who used the bridge in interstate commerce.
Defendant relies on Henderson Bridge Co. v. Kentucky, 166 U. S. 150 (17 Sup. Ct. 532). This case has particular significance because of a vigorous dissenting opinion by four justices. In both opinions the Covington Bridge Case was cited. The State imposed a tax upon the value of the franchise of a domestic corporation operating a railroad bridg’e. The minority held it was a franchise tax upon all the business of the bridge company and that its business was interstate commerce. They said:
“The contention that although the traffic over the bridge may be interstate commerce and the receipts from said traffic be interstate commerce receipts, yet the tolls paid to the bridge company are not receipts from interstate commerce business transacted by the bridge company, is a mere distinction without a difference. What, may I again ask, is the toll paid to the company for the use of the bridge but the result of a contract entered into for the purpose of carrying on interstate commerce'1? In the Covington Bridge Case the sole question was as to the right of the State of Kentucky to regulate the amount of tolls to be received by the bridge company. The right of the State was denied on the ground that the tolls were a matter of interstate commerce, that is, that the business of operating the bridge and charging for the use thereof was interstate commerce and not subject to State control. In that case then, the tolls .were adjudged to be receipts from interstate commerce; in the case at bar, they are declared not so to be. . The far-reaching consequence of this asserted distinction is well calculated to arouse solicitude for the future.”
The majority of the court held the tax was upon the franchise as intangible property and was not a burden upon interstate commerce because the bridge company was not engaged in interstate commerce. The reasons given for the ruling are not dicta, as suggested by plaintiff, although the ruling could have been sustained on other grounds. The court said:
“Clearly the tax was not a tax oh the interstate business carried on over or by means of the bridge, because the bridge company did not transact such business. That business was carried on by the persons and corporations which paid the bridge company tolls for the privilege of using the bridge. The fact that the tax in question was to some extent affected by the amount of the tolls received, and therefore might be supposed to increase the rate of tolls, is too remote and incidental to make it a tax on the business transacted.”
In Arkansas & Memphis R. B. & T. Co. v. State, ex rel. Attorney General, 174 Ark. 420 (295 S. W. 378), certiorari denied 275 U. S. 548 (48 Sup. Ct. 85), the tax was imposed on a foreign corporation, authorized to do ' business in Arkansas, for the “right or privilege of doing business in the State.” Its sole business was to maintain, own and operate an interstate bridge. It leased the bridge to three interstate carriers which owned all the capital stock of the bridge company and paid as rental for the use of the bridge only such sum as was necessary to take care of maintenance, taxes and other fixed charges. The court held the bridge company, by leasing, maintaining and keeping the bridge and its approaches repaired and employing labor and capital in the State, was doing business in the State, that maintenance of the bridge was not interstate commerce, and said:
“Appellant’s next contention is that, if engaged in business in Arkansas, it is engaged solely in interstate commerce or solely in the maintenance, ownership and operation of an instrumentality of such commerce. According to the stipulation and agreements in this case, the bridge company is not only not engaged in interstate commerce, but it is not engaged in any kind of commerce. It does not operate the bridge and does not carry either passengers or goods. In fact, it does nothing in the way of commerce,, either intrastate or interstate. It owns, leases, repairs and maintains the bridge across the Mississippi River, and, while the bridge may be an instrumentality of interstate commerce so far as the carriers are concerned; the bridge company has nothing whatever to do with carrying either freight or passengers, and therefore does not use the bridge as an instrumentality for interstate commerce or any other kind of commerce.”
In that case, as usual, the court reasoned from the facts before it. It did not intimate that if the bridge company had operated the bridge the résult would have been different.
In our opinion, the fact that plaintiff carries no persons or goods across the .international line is determinative that it is not engaged in foreign commerce and its property is not so used by it. We so read the authorities above cited.
Affirmed.
Nelson Sharpe, C. J., and Potter, North, Wiest, Butzel, Bttshnell, and Edward M. Sharpe, JJ., concurred. | [
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Nelson Sharpe, C. J.
The plaintiff, under an agreement entered into with the city of Detroit, acting through its board of water commissioners and confirmed by its common council, for one dollar and other consideration, agreed to construct a 15-foot tunnel from its power plant on the River Rouge to a point south of Jefferson avenue in the city; to erect an intake thereon at that point on land owned by the plaintiff, and to dredge out the “old channel” therefrom to the Detroit river. Its purpose was to secure a supply of water for its manufacturing plant in Dearborn. The third paragraph thereof reads as follows:
‘ ‘ The title to all of the structures covered by this agreement from the point where such tunnel enters the property of the Ford Motor Company on Miller road to and including the intake at the river shall vest perpetually, and without reversionary rights to the Ford Motor Company, in the city of Detroit.”
On March 31, 1931, after the tunnel had been constructed and the intake erected, the board of assessors of the city assessed the land on which the intake was erected at the sum of $57,770 and the intake structure, described as “screenhouse and superstructure,” at $700,000 to the plaintiff as owner. It revised this assessment on April 11, 1931, by placing the same value on the land and a valuation of $2,000,000 on “screenhouse, superstructure and water tunnel. ’ ’
It is conceded that while the roll was in the hands of the assessors the plaintiff made complaint that the assessment of the intake, described as above, and of the water tunnel to it was illegal and void as they were not the property of the plaintiff. The assessment roll was submitted to the common council for action thereon pursuant to the charter of the city. The plaintiff filed with it a petition asking an adjustment for the reason that the property was illegally and erroneously assessed. Thereupon the council caused the roll to he changed so that the following-assessments appeared thereon:
“(a) Eeal property:
Land located on private claim 45 in the city of Detroit, as described hereinabove.........$653,190.
“ (b) Personal property:
Water tunnel under public highways and as described hereinabove................$900,000.”
It is conceded that the records show that $51,990 of the real property assessment was placed on the land itself and the balance of $601,200 on the structure erected thereon. The assessment on the water tunnel was made on that portion of it located within the city of Detroit.
The roll was returned to the assessors, who spread a city tax of $14,787.18 on the real property and a city tax of $20,374.56 on the personalty. State and county taxes were afterwards spread thereon. The plaintiff sent checks to the city treasurer for the amounts of the taxes which were assessable against the land owned by it on which the intake or screen-house was erected on the valuation of $51,990 placed thereon by the common council, but they were returned to it. It then filed the bill of complaint herein, setting up the facts as stated, and prayed that the assessment and levy of the taxes be vacated and the defendants enjoined from enforcing their collection.
The answers of the defendants were, in effect, admissions of the facts stated in the bill and denials that the assessments were erroneous.
The trial court held the assessment to be illegal and void, and set aside the taxes thereon, except as to the taxes which might have been spread upon the valuation placed upon the land of plaintiff on which the intake had been erected, and for which payment had been tendered, and ordered plaintiff, to pay the same within 20 days from the date of the decree. The defendants have appealed.
In its opinion it stated the issue to be:
‘ ‘ The entire facts may be boiled down as to ownership of the screenhouse, superstructure and water tunnel, in fact, a construction of the formal contract entered into between the plaintiff on the one hand and the city on the other, with respect to the building of the tunnel and the necessary structures to carry out the intent of the parties.”
Defendants’ counsel insist that as it is conceded that there was no acceptance of the work by the city engineer when completed, as provided for in the contract for its construction, the title thereto remained in the plaintiff. In answer to this the trial court said:
“I feel that the minute the water was turned into this tunnel and transported to the plant of'the plaintiff company it was tantamount to an acceptance of this structure by the city. At least, it may properly bé said that this being a case founded in the equity side of the court, that equity regards that done which ought to have been done. I do not feel that the city could sit back, although the tunnel was being used for the very purpose designated in the formal contract, and because it had not placed its seal on the final results, could say the property belonged to anyone but itself.”
In this we think he was clearly right. It might also be said that under the terms of the contract the plaintiff was constructing the tunnel and the intake for the city, and not for itself. It at no time had title thereto. The inspection and acceptance would hut evidence the fact that the plaintiff had fully performed its contract. It is conceded that the construction had been completed and that the plaintiff was using the tunnel and intake at the time the assessment was made. Clearly, under the provision in .the contract quoted above, the title thereto rested in the defendant city and no legal tax thereon could be levied against the plaintiff.
Counsel for defendants in their brief claim that the contract was ultra vires. This defense was not raised in any of the answers filed, and may not now be considered by us. It is an affirmative defense, and must have been pleaded. Court Rule No. 23, § 3 (1933); Duluth, South Shore & Atlantic R. Co. v. Wilson, 200 Mich. 313 (L. R. A. 1918E, 763).
In a brief filed in this court after the case was submitted, counsel for the defendants ask that the cause be referred back to the circuit court for the purpose of permitting this defense to be specially pleaded. The record does not warrant such action on our part.
The decree is affirmed. As a public question is involved, no costs will be allowed.
Potter, North, Fead, "Wiest, Butzel, Bushnell, and Edward M. Sharpe, JJ., concurred. | [
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Kelly, J.
These two cases, consolidated for appeal, are for declaratory judgments concerning the constitutionality of section 4, subdivision (m) of PA 1959, No 272, under which there were assessed use taxes against plaintiffs, Walter Toebe & Company and Toebe-Hull Company.
The stipulation of facts pertaining to Walter Toebe & Company states that:
“While engaged as a road contractor in fulfillment of contracts with the Michigan State highway department during the calendar years 1961, 1962 and 1963, Walter Toebe paid certain use taxes through suppliers and also was assessed certain use taxes on purchases of personal property either used or consumed in said construction.”
The above quoted stipulation is also made regarding the other plaintiff, except that Toebe-Hull also fulfilled a contract with the county of Wayne during the stated period.
The Oakland circuit judge held that section 4, subdivision (m) imposing a tax on contractors dealing with the State and exempting those dealing with local units of government, constituted discrimination contra to the constitutional provision that: “The legislature may by law impose specific taxes, which shall be uniform upon the classes upon which they operate.” Article 10, § 4, Constitution of 1908 [Article 9, § 3, Constitution of 1963].
The use tax act was first enacted in 1937 and, as originally enacted, it set forth several categories of exemption, including the United States, the State and subdivisions, churches and schools (subdivisions [i] and [j] of section 4).
Section 4, subdivision (i) read:
“The tax hereby levied shall not apply to: * * *
“Property sold to the United States, the State of Michigan, its departments or institutions, or any of its subdivisions.”
PA 1949, No 273, § 4, subdivision (m), extended the exemption by providing that the tax should not apply to “property purchased by persons engaged in the business of constructing, altering, repairing, or improving real estate for others when property so purchased by such persons shall be affixed and made a structural part of real estate in the fulfill - men! of a contract” with the United States, the State of Michigan, its departments or institutions, or any of its subdivisions.
PA 1959, No 263, amended section 4, subdivision (m), eliminating the exemption on property purchased by contractors to fulfill construction contracts with the United States, and later that year the legislature by PA 1959, No 272 (the amendment now under consideration), eliminated the exemption on property purchased by a contractor whether the work was done for the United States or the State of Michigan.
In 1964, by Act No 164, the legislature restored the exemption on property purchased by contractors in fulfilling their construction contracts with both the United States and the State of Michigan.
Contending that contractors are a separate class that was split by section 4, subdivision (m) into two parts, plaintiffs state:
“The use tax act did establish contractors as a separate class. However, section 4, subdivision (m) arbitrarily split that class into two parts thereby destroying the tax uniformity required so that the use tax was imposed on purchases of tangible personal property by contractors when they fulfilled their construction contracts with the State of Michigan but exempted contractors from the use tax on such purchases involving contracts with cities, villages, townships and counties of the State.”
Appellant, contending that section 4, subdivision (m) meets constitutional requirements and that the Michigan legislature had the right to tax tangible personal property used in the construction of State highways and exempting tangible personal property used in constructing roads for counties, cities, and villages, states:
“The history of the exemptions from use tax as pertains to the construction industry unequivocally demonstrates that the exemption or lack of exemption with which we are here concerned, is one accorded to or denied a State or local governmental entity. The legislature has never sought, in either the-sales or use tax statutes, to exempt, or to economically benefit by any exemption, persons such as the appellees who are private construction contractors engaged in activity for profit. To speak of commercial construction contractors as a class and to seek to identify the legislative power of exemption with these private enterprises completely misses the intent of the legislature in granting the exemption or lack of exemption complained of here. Furthermore, a construction contractor with the State does hot hear the economic burden of the use tax. It is an element of the unit price in the hid. This raises a serious question of whether appellees have a justiciable issue to raise in these causes. The tax consequence .of the lack of exemption here complained of is one borne by the sovereign State at the election of the legislature. * * *
“The subdivisions of the State of Michigan are on an entirely different legal, political and economic footing than the State of Michigan and its institutions. There exist many basic differences, in fact, which justify the exemption by the legislature of the purchase of material used by plaintiffs in constructing roads and streets for counties, cities, and townships, while taxing the purchase of tangible personal property used by them in constructing highways for the State of Michigan.”
We have approved in Rockwell Spring & Axle Company v. Romulus Township (1962), 365 Mich 632, the right to exempt a tax on one division of government and not on another. The plaintiff in Rockwell argued that by those leasing the facilities of Willow Run Airport, which were owned by a State supported educational institution, paying no tax, and by the plaintiff paying a tax on substantially identical facilities leased from the county of Wayne, the act was unconstitutional as lacking tax uniformity. This argument was unanimously rejected.
We agree with appellant that there exist many basic differences between the State and its subdivisions that would justify the legislature exempting the tax on materials used in constructing county, city, and village roads and not State roads, and we have stated in cases like the present that it is not the function of this Court to consider the propriety or justness of the tax, nor to criticize the public policy which led to adoption of the legislation. See W. S. Butterfield Theatres, Inc., v. Department of Revenue (1958), 353 Mich 345.
The question presented is whether one group of contractors is favored over another group and is not whether the counties, cities, and villages are favored over the State.
Section 4, subdivision (m) did not designate one group of contractors that could bid on State construction work and another group for county, city, and village work. The stipulation of facts establishes that plaintiff Toebe-Iiull fulfilled a contract with the State of Michigan and with the county of Wayne during the stated period.
The contractor engaged in construction activities for the State initially pays the use tax on the materials needed for such construction work, but the State reimburses the contractor as he is paid for the work, and we agree with defendant’s claim that “a construction contractor with the State does not bear the economic burden of the use tax. It is an element of the unit price in the bid.”
Plaintiff Toebe-Hull Company admits in the pleadings in this case that it considered the tax in computing its bid and thereby such tax was included in its contract price, but claims that this fact is neither “material or relevant to this case.”
Section 4, subdivision (m) did not “split that class [contractors] into two parts,” as appellees contend. It only split the property purchased in two parts— the property purchased for State construction and the property purchased for completing worlc for subdivisions of the State of Michigan.
Plaintiffs in this present appeal and Amici Curiae claim that:
(1) Knapp-Stiles, Inc., v. Department of Revenue (1963), 370 Mich 629, is controlling;
(2) “The provisions of section 4, subdivision (m) as amended by PA 1959, No 272, selectively removing the tax exemption formerly given to contractors with the United States and the State of Michigan are not severable. Consequently, when the amendment respecting contractors with the United States was held to be unconstitutional in Knapp-Stiles, Inc., the amendment respecting contractors with the State of Michigan also failed.”
Knapp-Stiles, Inc., v. Department of Revenue, supra, is not controlling, as the only question there decided was the State’s right to impose a tax on property used by contractors in fulfilling contracts with the United States while exempting like contracts with subdivisions of the State.
The distinction between the question presented in that case and the instant case has been established in several United States Supreme Court decisions and in Knapp-Stiles we cited Phillips Chemical Co. v. Dumas Independent School District (1960), 361 US 376 (80 S Ct 474, 4 L ed 2d 384), where it was said (p 385):
“We have made it clear, in the equal protection cases, that our decisions in that field are not necessarily controlling where problems of intergovernmental tax immunity are involved. • In Allied Stores of Ohio, Inc., v. Bowers, 358 US 522, (79 S Ct 437, 3 L ed 2d 480), for example, we noted that the State was ‘dealing with [its] proper domestic concerns, and not trenching upon the prerogatives of the National government.’ 358 US at 526. When such is the case, the State’s power to classify is, indeed, extremely broad, and its discretion is limited only by constitutional rights and by the doctrine that a classification may not be palpably arbitrary. Id., at 526-528. But where taxation of the private use of the government’s property is concerned, the government’s interests must be weighed in the balance. Accordingly, it does not seem too much to require that the State treat those who deal with the government as well as it treats those with whom it deals itself.”
PA 1945, No 119 (CL 1948, § 8.5 [Stat Ann 1961 Rev § 2.216]), sets forth the rule of construction in Michigan concerning “severability,” as follows:
“In the construction of the statutes of this State the following rules shall be observed, unless such construction would be inconsistent with the manifest intent of the legislature, that is to say:
“If any portion of an act or the application thereof to any person or circumstances shall be found to be invalid by a court, such invalidity shall not affect the remaining portions or applications of the act which can be given effect without the invalid portion or application, provided such remaining portions are not determined by the court to be inoperable, and to this end acts are declared to be severable.”
There being no “manifest intent of the legislature” that the exceptions set forth in section 4, subdivision (m) be inseparable, plus the fact that the invalidation of one exception by Knapp-Stiles in no way affects the operability of the others, we must reject plaintiffs’ claim in re “severability.”
Applying established principles to determine issues such as here presented, this Court assumes “there was a sound basis in the reason for the legislature’s classification until the contrary is shown, and one who assails such classification must carry the burden of showing that it does not rest upon any reasonable basis, but is essentially arbitrary.”
We conclude that plaintiffs have failed to meet this test and that there is no basis for the legal contentions advanced by plaintiffs-appellees and adopted by the lower court.
Therefore, the judgment of the lower court is reversed and section 4, subdivision (m), of the Michigan use tax act (PA 1937, No 94, as amended by PA 1959, No 272) was constitutional, as it related to contracts with the State of Michigan.
No costs, a public question being involved.
Dethmers, C. J., and Black, Souris, O’Hara, and Adams, JJ., concurred with Kelly, J.
T. M. Kavanagh, J., concurred in the result.
Brennan, J., took no part in the decision of this case.
CLS 1961, § 205.94 (Stat Ann 1960 Rev § 7.555[4]).
PA 1937, No 94 (CL 1948, § 205.91 et seq. [Stat Ann § 7.555(1 > et seq.]).
Amending CL 1948, § 205.94 (Stat Ann 1965 Cum Supp § 7.555 W).
Defendant’s affirmative defense, paragraph 3, page 8a of appendix; plaintiff’s reply to defendant’s affirmative defense, paragraph 3, page 12a of appendix.
City of Lansing v. Township of Lansing (1959), 356 Mich 641, 650, 651. | [
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