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Bandstra, J.
In these consolidated appeals, the Michigan Department of Treasury (defendant) challenges orders issued by the Court of Claims in favor of the plaintiff taxpayers. We reverse.
Plaintiffs are involved in oil and gas exploration and development. They filed personal income tax returns and Michigan severance tax returns for several years before the issuance of Bauer v Dep’t of Treasury, 203 Mich App 97; 512 NW2d 42 (1993). Before Bauer, defendant treated oil and gas revenues as taxable under the Michigan Income Tax Act (ita), MCL 206.1 et seq.; MSA 7.557(101) et seq. In Bauer, this Court concluded that the severance tax act’s “in lieu of all other taxes” provision, MCL 205.315; MSA 7.365, clearly and unambiguously meant that oil and gas proceeds subject to severance tax are exempt from taxation as income. Accordingly, plaintiffs filed amended income tax returns for the years at issue. After exempting oil and gas gross proceeds from income, but still deducting oil and gas expenses, each of the amended returns reflected a net operating loss (nol), which plaintiffs carried back to offset income in previous years and resulted in a claim for a refund. Defendant denied the refund claims, taking the position that the nols had been improperly calculated, and these lawsuits resulted.
The parties filed motions and cross-motions for summary disposition, there being no genuine issue of material fact but only questions of law regarding the proper interpretation of the applicable statutory sections. The Court of Claims decided in favor of plaintiffs and determined that they were entitled to the refunds resulting from their NOL calculations.
Defendant first argues that Bauer was wrongly decided and asks that we express our disagreement with its holding so that a special panel might possibly be convened under MCR 7.215(H) for the purpose of reversing Bauer. We decline this invitation. Pursuant to MCR 7.215(H), Bauer was followed by a panel of this Court in Cowen v Dep’t of Treasury, 204 Mich App 428; 516 NW2d 511 (1994), notwithstanding the opinion of two judges on the panel that Bauer was wrongly decided. This did not result in the convening of a special panel or reversal of Bauer under MCR 7.215(H). Further, our Supreme Court denied leave to appeal in both Bauer, 447 Mich 979 (1994), and Cowen, 447 Mich 980 (1994).
In addition, since Bauer was decided, the Legislature has had two opportunities to correct Bauer's understanding of the severance tax act if it was contrary to legislative intent. In 1994, the severance tax act was amended to add a provision to help finance the orphan well fund and the state general fund. 1994 PA 307, MCL 205.314(1)(a) and (b); MSA 7.364(l)(a) and (b), effective October 1, 1994. In 1996, the act was again amended to add a severance tax exemption for certain gas and oil products. 1996 PA 135, MCL 205.303(3); MSA 7.353(3), effective March 19, 1996. The Legislature is presumed to act with knowledge of appellate court statutory interpretations. Glancy v Roseville, 216 Mich App 390, 394; 549 NW2d 78 (1996). We agree with plaintiffs that Bauer must be accepted as established law at least in our Court for purposes of these appeals. Therefore, we consider defendant’s second argument starting with the Bauer holding.
Assuming under Bauer that oil and gas gross proceeds that are subject to the severance tax act are not properly taxable as income under the ITA, defendant argues on appeal that neither those proceeds nor any related expenses should be included in plaintiffs’ nol calculations. This is a question of law centering on various sections of the ITA, a matter that we review de novo. USAA Ins Co v Houston General Ins Co, 220 Mich App 386, 389; 559 NW2d 98 (1996).
In allowing taxpayers an NOL adjustment for the purpose of computing “taxable income,” the Michigan ita at the time relevant to these appeals referenced the federal Internal Revenue Code (IRC):
(1) “Taxable income” means . . . adjusted gross income as defined in the internal revenue code subject to the following adjustments:
* * *
(o) Add, to the extent deducted in determining adjusted gross income, the net operating loss deduction under section 172 of the internal revenue code.
(p) Deduct a net operating loss deduction for the taxable year as defined in section 172 of the internal revenue code subject to the modifications under section 172(b)(2) of the internal revenue code and subject to the allocation and apportionment provisions of chapter 3 of this act for the taxable year in which the loss was incurred. [MCL 206.30(1)(o) and (p); MSA 7.557(130)(1)(o) and (p).]
Subsection 172(c) of the IRC defines an NOL:
Net operating loss defined. — For purposes of this section, the term “net operating loss” means the excess of the deductions allowed by this chapter over the gross income. ... [26 USC 172(c).]
The IRC further provides that certain deductions are not generally allowable:
General Rule. — No deduction shall be allowed for—
(1) Expenses. — Any amount otherwise allowable as a deduction which is allocable to one or more classes of income other than interest . . . wholly exempt from the taxes imposed by this subtitle .... [26 USC 265(a)(1).]
This limitation applies in determining deductions allowable in calculating an nol.
For federal tax purposes, these provisions of the IRC are quite straightforward and easily applied to oil and gas gross proceeds because those proceeds are subject to federal income taxation. Specifically, oil and gas gross proceeds are included within federal “adjusted gross income” subject to any nol deduction under § 172 of the IRC that might apply. Because oil and gas gross proceeds are not a class of income wholly exempt from the taxes imposed by the IRC, deductions for expenses incurred in generating those proceeds are not subject to the disallowance of 26 USC 265(a)(1).
The central issue in this case is whether this same approach should be taken for purposes of the NOL provisions of subsection 30(1) of the Michigan ita, even though, because of Bauer, oil and gas gross proceeds are no longer subject to state income taxation. In other words, must expenses that are properly allocated to the production of oil and gas gross proceeds be excluded in calculating an NOL because those proceeds are exempt from tax under the ITA as determined in Bauer?
In answering this question, we are governed by the usual rules of statutory construction. “The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature.” Little Caesar Enterprises, Inc v Dep’t of Treasury, 226 Mich App 624, 629; 575 NW2d 562 (1997). “When ascertaining legislative intent, the language of the statute should be given a reasonable construction, considering the statute’s purpose and the object sought to be accomplished.” Great Lakes Sales, Inc v State Tax Comm, 194 Mich App 271, 276; 486 NW2d 367 (1992).
In this case, our task is aided greatly by an ita provision specifying legislative “intent” and “the object sought to be accomplished” by the statute:
It is the intention of this act that the income subject to tax be the same as taxable income as defined and applicable to the subject taxpayer in the internal revenue code, except as otherwise provided in this act. [MCL 206.2(3); MSA 7.557(102)(3).]
This statement of intent was useful to another panel of our Court in Preston v Dep’t of Treasury, 190 Mich App 491; 476 NW2d 455 (1991), which considered a related question regarding whether Michigan income tax taxpayers should receive a deduction for an nol. Our Court reasoned that “[b]ecause the Internal Revenue Code defines adjusted gross income to include a deduction for an nol, it, therefore, follows that the Michigan Income Tax Act allows an nol deduction” through the operation of subsection 2(3). Id. at 495. In addition to allowing Michigan taxpayers an NOL deduction based on the IRC applied through subsection 2(3) of the Michigan ita, the Court further reasoned that taxpayers could apply the nol deduction using the carry-back and carry-forward provisions of the IRC as well. Id.
The logic of Preston is clear. Subsection 2(3) means that a Michigan taxpayer’s “income subject to tax” is calculated in the same manner as it would be under the federal irc, in the absence of an express provision of the Michigan ITA requiring a different result. As with the federal NOL and carry-forward/carry-back rules adopted for Michigan ita purposes in Preston, we conclude that the federal disallowance of deductions allocable to income exempt from income taxation applies in this case. Because plaintiffs’ oil and gas gross proceeds are not subject to income taxation, they are not permitted to deduct expenses associated with the activity that generated those proceeds in calculating an nol.
We find plaintiffs’ arguments against that result to be wholly unconvincing. Their basic argument rests on MCL 206.30(1)(p); MSA 7.557(130)(1)(p), which at the time relevant to these appeals allowed an NOL deduction “as defined in section 172 of the internal revenue code . . . .” Plaintiffs argue that this provision should be applied in a wooden fashion to them, allowing them to calculate an NOL including expenses related to oil and gas activity simply because, under § 172 of the IRC, they are allowed to include those expenses for federal tax purposes. However, this is the result under § 172 only because oil and gas gross proceeds are taxable income for federal purposes and, if they were not, the expenses would not be a deduction allowable in calculating a federal NOL. 26 USC 172(c); 26 USC 265(a)(1). We construe the statement of legislative intent found in the ita to mean that we must treat a Michigan taxpayer the same way that taxpayer would be treated under the federal IRC. MCL 206.2(3); MSA 7.557(102)(3). If the taxpayer’s oil and gas gross proceeds were exempt from income taxation under federal law, they would not be allowed to deduct expenses allocable to those proceeds in calculating an NOL. Accordingly, because those proceeds are exempt from Michigan income taxation under Bauer, plaintiffs cannot deduct expenses allocable to the proceeds in calculating a Michigan NOL.
Plaintiffs argue that the income averaging allowed by the carry-forward/carry-back provisions applicable to nols somehow evidences a legislative intent regarding how nols should be calculated in the first place. For purposes of this case, plaintiffs argue that the NOL calculation should allow deductions for gas and oil production expenses. We fail to see the logic of this argument; the ability to carry an NOL forward or back has nothing to do with how an NOL is properly calculated. Thus, we find cases like Production Credit Ass’n of Lansing v Dep’t of Treasury, 404 Mich 301; 273 NW2d 10 (1978), cited by plaintiffs, to be inapposite.
Plaintiffs also argue that a “separate accounting” approach where “one would in theory separate the several businesses of a taxpayer, so that each business would be treated as if conducted by a separate entity” has generally been rejected. Accordingly, plaintiffs argue that we should reject an approach that treats oil and gas activity by a taxpayer as a separate matter and thus disallows the deduction of oil and gas expenses from revenues generated in other endeavors. We need not decide whether a general “separate accounting” approach has, in fact, been rejected. Instead, we are governed by the language of the statutes, and we conclude that the severance tax act’s “in lieu of” language, coupled with 26 USC 265(a)(1) through operation of subsection 2(3) of the ITA as discussed above, means that both oil and gas gross proceeds and expenses are exempted from treatment under the Michigan ITA. To the extent that this establishes an accounting for both proceeds and expenses of gas and oil activity separate from the ITA, that is the result required by the statutes.
Finally, plaintiffs make what are, in effect, a number of policy arguments. They point out that the tax rate imposed upon gross proceeds under the severance tax act is higher than the rate imposed on income under the ita and that the severance tax act allows no deductions for expenses related to the production of oil and gas proceeds. While all of this may be true, it has nothing to do with the legislative intent regarding the question at issue here. If plaintiffs feel that the severance tax rate is too high or that gross proceeds should be reduced by business expenses before imposition of the severance tax, they should approach the Legislature for changes in the severance tax act.
Similarly, plaintiffs argue that our decision today could result in taxpayers paying a higher income tax than if there were no “in lieu of” language in the severance tax act removing gross proceeds from income taxation. This will occur “every time a taxpayer’s oil and gas activity expenses exceed its oil and gas gross proceeds.” Again, while this may be true, we do not agree with the taxpayers that this is an “absurd consequence” clearly in contradiction of legislative intent. Instead, plaintiffs’ argument presents a policy question properly to be considered by the Legislature, not the courts.
We reversed.
For the tax years at issue in Preston, the statute did not include the nol provisions quoted above; it has since been amended to include them. Preston, supra at 494-496.
Plaintiffs do not argue that there is a provision of the ita making subsection 2(3) inapplicable in this case. To the extent that other sections of the ita are relied upon by the taxpayers, their arguments are rejected further on in. this opinion.
Our conclusion that subsection 265(a)(1) of the IRC generally applies, under subsection 2(3) of the ita, to prevent Michigan taxpayers from deducting expenses related to exempt classes of income is not undermined by the inclusion within the Michigan ita of a provision requiring that result for expenses incurred in producing tax-exempt “income derived from obligations ... of the United States . . . .” See MCL 206.30(1)(d); MSA 7.557(130)(1)(d). The disallowance of deductions in IRC subsection 265(a)(1), by its terms, only applies to amounts allocable to interest to the extent the interest is “wholly exempt from the taxes imposed by this subtitle . ...” 26 USC 265(a)(1). Interest on United States government obligations is not exempt from federal taxation. Thus, subsection 30(1)(d)’s disallowance of a deduction for expenses incurred in producing interest income from United States government obligations applies to a class of income that is not within the general purview of IRC subsection 265(a)(1). Accordingly, subsection 30(1)(d) of the ita does nothing to negate the general applicability of irc subsection 265(a)(1) to noninterest classes of income such as the oil and gas gross proceeds at issue here.
We also note that, because the taxpayers are seeking an exemption from taxation, we construe the statute strictly in favor of defendant. Great Lakes Sales, Inc, supra.
This may be an unintended consequence of the tax statutes and, if so, the taxpayers may be able to present a good argument that the statutes should be amended. | [
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Neff, P.J.
Steven Parker appeals as of right from an order and opinion of the State Tenure Commission discharging him from his position as a tenured teacher in the Byron Center Public School District. We affirm.
i
In September 1995, the superintendent of the Byron Center Public Schools received a letter from a woman alleging that appellant had engaged in a sexual relationship with her in the late 1970s while she was a student in the district. After an investigation of the matter, the Board of Education of the Byron Center Public Schools initiated action under the teacher tenure act, MCL 38.71 et seq.) MSA 15.1971 et seq., to terminate appellant’s employment as a tenured teacher on the basis of the woman’s allegations. Appellant exercised his right under the act to contest the charges before the State Tenure Commission. MCL 38.104(1); MSA 15.2004(1). The hearing officer assigned to the case conducted a formal tenure hearing regarding the matter in January 1996 pursuant to MCL 38.104(2)-(5); MSA 15.2004(2)-(5).
The woman testified that appellant was her homeroom teacher when she was in the fifth grade, and that appellant began to sexually abuse her when she was a student at Byron Center High School and he was a teacher at Rider School, an elementary school in the district. The woman testified that the sexual contact began on December 31, 1978, when appellant gave her a New Year’s kiss after driving her home from baby-sitting his children. Soon thereafter, in January 1979, appellant’s wife asked her to baby-sit the children for a few days while appellant was having ankle surgery. The woman testified that on the night that appellant returned home from the hospital, appellant negotiated the stairs with his crutches and came downstairs where she was sleeping on the couch, and that he again kissed her. According to the woman, appellant would also Mss and fondle her in the car almost every time appellant drove her home after baby-sitting, which was once or twice a month. The woman stated that she protested the activity on many occasions.
In February 1979, appellant telephoned the woman’s mother and received her consent to excuse her daughter’s absence from school to accompany appellant to a doctor’s appointment. The woman testified that appellant picked her up from the high school at 1:00 p.m., took her out to dinner after the doctor’s appointment, and that he kissed and fondled her breasts and genitals through her clothing. The woman stated that appellant asked to perform oral sex on her but she refused. The woman recalled that, as appellant was driving her home, he told her to hide her underwear so that her mother would not see any discharge that may have been present. The woman’s mother confirmed that appellant did not return her daughter home until approximately 10:00 P.M. that evening.
The woman testified that appellant soon began engaging in oral sex and sexual intercourse with her. Early one morning when she was home alone, appellant walked over to her home, which was only a few hundred yards from the school where appellant taught third grade. The woman testified that appellant laid her down on the living-room floor, undressed her, and performed oral sex on her. The woman stated that appellant continued to go to her house four or five mornings a month to have sexual intercourse with her. Appellant instructed her to leave the backyard light on when it was safe for him to come over, and he warned her not to tell anyone because her mother would be angry and his job would be in jeopardy.
The woman testified that the abuse ended after several months because she began to make herself unavailable to appellant. She explained that she did not come forward sooner because she blamed herself for what happened, but she finally realized that it was not her fault and she wanted to prevent appellant from hurting other children.
Appellant testified on his own behalf and denied that he ever kissed, fondled, or had any type of sexual relations with the woman. He further denied each of the specific allegations made by her, including her claim that he took her to a doctor’s appointment or took her to dinner. Appellant admitted that he occasionally went to her house to borrow things in the morning and did eventually realize that her parents were not usually home. However, appellant denied that he ever went over to her house for the purpose of visiting her or to engage in sexual relations with her.
In May 1996, the hearing officer issued a preliminary decision and order concluding that the board proved by a preponderance of the evidence that appellant had engaged in sexual relations with the woman while she was a student of the district and that appellant’s conduct warranted discharge. Pursuant to MCL 38.104(5)0); MSA 15.2004(5)0), appellant submitted exceptions to the preliminary decision and order of the hearing officer. The commission issued its final decision and order in July 1996, which upheld the preliminary decision. This appeal followed.
n
Appellant first argues that the commission erred in not dismissing the charges because the underlying events occurred in 1979, sixteen years before the charges were brought by the board. Appellant insists that because of the long time lapse between the alleged events and the charges, he has been unduly prejudiced in presenting a sufficient defense. We disagree.
A
The commission has considered this issue previously, and, although the decisions of the commission are not binding on this Court, we may choose to give them some deference. DAIIE v Comm’r of Ins, 119 Mich App 113, 120; 326 NW2d 444 (1982). In Matson v City of Berkley School Dist Bd of Ed, (88-25) the commission refused to allow evidence of sexual misconduct that took place twenty-three years before the filing of the charges. However, in two more recent cases, Waara v Van Buren Public Schools Bd of Ed (93-33) and Bergerow v Kentwood Public Schools Bd of Ed, (95-36), the commission allowed evidence of sexual misconduct that allegedly occurred approximately thirteen and twenty years, respectively, before the charges were filed. In the present case, the alleged sexual misconduct took place sixteen years before the charges were filed.
The Legislature is assumed to be aware of prior administrative interpretations of its acts, and legislative silence in the face of an agency’s construction is construed as a consent to that construction. Dykstra v Dep’t of Natural Resources, 198 Mich App 482, 489-490; 499 NW2d 367 (1993). Despite the commission’s decisions in Waara and Bergerow, the Legislature has riot acted to include a statute of limitations in the teacher tenure act for charges relating to sexual misconduct. If there is to be a statute of limitations, it should be legislatively created; we are disinclined to act where the Legislature has not, particularly where the administrative holdings are soundly reasoned as they are in Waara and Bergerow.
B
Appellant relies on Lemmerman v Fealk, 449 Mich 56; 534 NW2d 695 (1995), to support his claim that it would be unjust and unreasonable to force him to defend against alleged events that occurred sixteen years ago. In Lemmerman, our Supreme Court held that, in civil actions brought by plaintiffs who alleged that they were sexually abused forty to fifty years before the actions were filed, neither the discovery xule nor the insanity grace period applied to toll the statute of limitations in these “repressed memory” cases. In so holding, the Court determined that the policy goals of the statute of limitations to prevent stale, fraudulent, or speculative claims outweighed the plaintiffs’ rights to maintain their claims because of the lack of objective verification and indicia of reliability for their underlying claims. Id. at 74-77.
Contrary to appellant’s argument, this case is significantly different from that in Lemmerman. First, as noted above, the Legislature has not set forth a statute of limitations for bringing charges against a teacher for sexual misconduct. Second, this is not a case of “repressed” memory. The woman did not “forget” what happened between herself and appellant; rather, she delayed coming forward because for years she blamed herself for what happened. Thus, her account of the events is inherently more rehable than that of the plaintiffs in Lemmerman who were not conscious of the abuse for decades and then began to remember it. Third, the plaintiffs in Lemmerman waited forty to fifty years to bring their civil claims, while the abuse in this case took place sixteen years before charges were brought by the board. Finally, the plaintiffs in Lemmerman were seeking personal redress for past sexual abuse, while the proceedings before the commission not only served to discipline appellant for past sexual abuse, but, perhaps more importantly, to prevent any future abuse of other students.
c
This Court has previously stated that requiring teachers to answer charges concerning events that occur during a previous school year is not fundamentally unfair. Sutherby v Gobles Bd of Ed (After Remand), 132 Mich App 579, 583; 348 NW2d 277 (1984). In Sutherby, this Court stated:
We find no instance in the present case supporting the claim of significant loss of a teacher’s ability to defend himself due to the lapse of time. While individual cases may occur in which the delay in bringing charges might render a dismissal unjust or unreasonable, fundamental fairness can be achieved without creating a general rule forbidding the consideration of charges based on events from a previous school year. [Id. at 583-584 (emphasis added).]
Like the Court in Sutherby, we decline to establish a bright-line time limit for bringing allegations of sexual misconduct under the teacher tenure act, particularly when the Legislature has clearly chosen not to impose a statutory time limit. If there is particular, identifiable evidence of prejudice to a teacher’s ability to defend the charges, the teacher may be entitled to dismissal of the charges. However, a sexual predator, particularly of young children, may not argue that he should escape responsibility under the teacher tenure act merely because time has passed.
With respect to this issue, we find persuasive the reasoning of the court in Fisher v Independent School Dist No 622, 357 NW2d 152 (Minn App, 1984):
“The fortuitous fact that the school board did not have immediate knowledge of the alleged sexual relationship with the sixteen-year old minor student is not the Board’s fault. There is no showing that the Board unduly delayed in bringing this termination action after it had received knowledge of the alleged occurrence. By virtue of the nature of the offense — seocual intercourse with a minor student of the district — it may be considered doubtful whether such conduct could ever be too remote in time." [Id. at 156, quoting Johnson v Independent School Dist No 294, No 12305, Dist Ct Mem (3d Judicial Dist Feb 12, 1980) (emphasis supplied).]
In the present case, there has been no showing of an inability to defend owing solely to the lapse of time. To the contrary, appellant makes only general comments about prejudice resulting from the fading of various witnesses’ memories. This is not enough. As the board correctly notes, it bore the burden of proof to show reasonable and just cause for discharging appellant. Sutherby, supra at 582. lime and faded memories make meeting that burden all the more difficult. Moreover, it is without question that the board acted promptly upon its receipt of the woman’s letter alleging sexual misconduct by appellant. Finally, as the court in Fisher noted, it is questionable whether conduct such as that engaged in by appellant would ever be too remote to support a tenured teacher’s dismissal.
School boards such as the appellee in this case have a duty to do all they can to protect children from sexual and other kinds of misconduct. This duty outweighs any claim that the perpetrator may have that claims cannot go forward simply because of the passage of time.
m
Appellant next argues that the commission erred in upholding the hearing officer’s exclusion of evidence regarding the woman’s alleged sexual contact with appellant following her high school graduation and in excluding evidence of the woman’s sexual history with individuals other than appellant. We disagree.
A
Appellant’s counsel alleged that the woman, in her deposition, stated that she had sexual contact with appellant after her graduation from high school. Appellant contended that he could disprove these allegations and posited that the evidence was relevant to the woman’s credibility: if she would lie about sexual contact that took place in 1981, she would lie about sexual contact that took place in 1979.
The hearing officer properly held that the evidence was inadmissible because it was irrelevant. The woman’s relationship with appellant in 1981 had no bearing on the charges brought against him, which concerned his relationship with the woman only while she was a student. On appeal, appellant claims that the woman’s deposition testimony regarding her sexual contact with him in 1981 was admissible as a prior inconsistent statement because she testified at the hearing that her relationship with appellant ended in 1979 when she stopped making herself available to Iiim. We need not address this issue, which was first raised in appellant’s exceptions to the preliminary decision and order. See Booth Newspapers, Inc v Univ of Michigan Bd of Regents, 444 Mich 211, 234; 507 NW2d 422. (1993) (issues first raised on appeal need not be addressed by this Court). In any event, the impeachment value of the excluded evidence, if permitted, would have been minimal. We find no error here.
B
The hearing officer granted the board’s motion in limine regarding evidence of the woman’s sexual history, other than that involving appellant, but expressed his willingness to revisit the matter if appellant could make a particularized showing of how such evidence would be relevant. The commission upheld the decision of the hearing officer, stating that appellant failed to make a specific showing detailing the proposed evidence and demonstrating its relevance. Appellant now argues that the commission erred because he was denied the opportunity to question the woman during deposition or otherwise conduct discovery regarding her sexual history with persons other than him and thus could not make the particularized showing required by the commission.
Under the rape-shield statute, MCL 750.520j(1); MSA 28.788(10)(1), evidence of past sexual conduct with others is generally legally irrelevant. People v Arenda, 416 Mich 1, 10; 330 NW2d 814 (1982). Our Supreme Court has recognized, however, that in certain limited situations, such evidence may be relevant and its admission required to preserve a criminal defendant’s Sixth Amendment right to confrontation. People v Hackett, 421 Mich 338, 348; 365 NW2d 120 (1984). For example, the evidence may be admissible for the narrow purpose of showing the complaining witness’ bias, showing a complainant’s ulterior motive for making a false charge, or showing that the complainant has made false accusations of rape in the past. Id. In addition, this Court has held that a defendant’s “figment of the imagination” defense theory may be sufficiently intertwined with the defendant’s Sixth Amendment right of confrontation so as to overcome the exclusionary effect of the rape-shield statute. People v Byrne, 199 Mich App 674; 678; 502 NW2d 386 (1993).
We first note that the evidence was permitted in these cases in order to preserve the criminal defendant’s Sixth Amendment right to confrontation. Appellant is not a criminal defendant; therefore, his Sixth Amendment rights are not implicated. Furthermore, in order to gain admission of other sexual history for one of these narrow permissible purposes, a party is obligated to make an initial offer of proof with respect to the proposed evidence and to demonstrate its relevance. Hackett, supra at 350; Byrne, supra at 678. Appellant has failed to make such a particularized showing in this case before the hearing officer, the commission, or this Court. Contrary to appellant’s argument, he was not entitled to embark on discovery of the woman’s sexual relationships with people other than him without first making an appropriate offer of proof. Indeed, the very purpose of the exclusionary statute is to shield victims of sexual assault from questions that would harass or humiliate them and to guard against mere fishing expeditions. Hackett, supra at 350.
The commission properly upheld the hearing officer’s exclusion of evidence regarding the woman’s sexual history with individuals other than appellant.
rv
Plaintiff also argues that the commission’s decision to terminate appellant’s employment was not supported by competent, material, and substantial evidence on the record as a whole. We disagree.
A
This Court’s review of the commission’s findings is limited. We determine from the record whether there was competent, material, and substantial evidence received by the Board or the commission, or both, to support the commission’s findings. Tomczik v State Tenure Comm, 175 Mich App 495, 499; 438 NW2d 642 (1989). In doing so, we review the entire record, not just the portions that support the commission’s findings. See Great Lakes Sales, Inc v State Tax Comm, 194 Mich App 271, 280; 486 NW2d 367 (1992). Substantial evidence is that which a reasonable mind would accept as adequate to support a decision; it is more than a scintilla but may be substantially less than a preponderance. Tomczik, supra at 499. Furthermore, deference must be given to the commission’s determination of the credibility of witnesses who appeared before it. Miller v Grand Haven Bd of Ed, 151 Mich App 412, 422; 390 NW2d 255 (1986). Nonetheless, we conduct an independent assessment of whether the commission’s determination of the credibility of the parties is supported by the evidence.
B
As with many cases involving allegations of sexual assault or abuse, this case was essentially a credibility contest between the woman and appellant. The hearing officer found that the woman testified in a straightforward manner and was more credible and more persuasive than appellant. The officer further stated that the woman’s testimony was corroborated by other witnesses. In addition, the officer noted that the woman had intimate knowledge of certain aspects of appellant’s personal life, which lent further support to her allegations. However, the officer believed that parts of appellant’s testimony appeared forced.
The crux of appellant’s claim is that the woman was not credible and that the evidence, taken as a whole, did not support a finding of sexual abuse by appellant. Both the hearing officer and the commission made exceptionally detailed findings of fact in support of their determinations that appellant had engaged in sexual activity, including repeated instances of sexual intercourse, with a student. Without question, this conduct provides a sufficient basis for the commission’s decision to discharge appellant. We have carefully reviewed the record and conclude that the commission’s findings were supported by competent, material, and substantial evidence on the record.
Affirmed.
The charges filed by the board also included an allegation that appellant exposed himself to another female student during the summer of 1978 or 1979; however, that charge was ultimately dismissed for lack of evidence.
The woman’s parents left for work at 6:00 A.M., and her sister frequently spent the night at the home of their older sister.
We also note that independent corroboration of the woman’s claims existed, albeit slight. For example, a neighbor testified that appellant often walked to the woman’s house in the early morning hours when her parents were not home. Also, two individuals testified that the woman had confided in them at the time that a sexual relationship was occurring between her and appellant.
For example, where a key witness has died or is otherwise unavailable and there is no corroborating or circumstantial evidence to support 1he victim’s claims.
Although the woman apparently told her sophomore-year history teacher about her sexual relationship with appellant, the teacher did not tell any member of the school administration about what the woman had confided in him. | [
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Cavanagh, J.
In this case we are asked to determine if a probate court has the statutory authority to permit the plenary guardian of a ward to consent to a tubal ligation of the ward for birth control purposes. For the reasons indicated below, we conclude that the probate court does have such authority. We fur ther conclude that the authority was properly exercised in this case, and therefore affirm the order of the Genesee County Probate Court.
The underlying facts in this case are straightforward, despite the lengthy course of litigation. In 1981, eighteen-year-old Lora Faye Wirsing was adjudicated to be a developmentally disabled person as a result of retardation since her birth. The Genesee County Probate Court appointed petitioner-appellant Donna L. Wirsing as plenary guardian of her daughter, Lora Faye Wirsing, under the Mental Health Code, MCL 330.1600 et seq.; MSA 14.800(600) el seq. In 1986, the guardian petitioned the Genesee County Probate Court for authorization for a tubal ligation for birth control purposes. Both the Genesee Probate and Circuit Courts denied having jurisdiction. The first decision of the Court of Appeals in this matter held that jurisdiction properly lay in the probate court.
The case was returned to the probate court, where the Michigan Protection and Advocacy Service (MPAS) was allowed to intervene. Following denial of an MPAS motion to dismiss the petition, with leave for an interlocutory appeal being denied by the Court of Appeals and this Court, the case proceeded to an extensive evidentiary hearing. The guardian and mpas presented numerous lay and expert witnesses.
The trial judge made nineteen specific findings of fact, as follows:
1. That Lora Faye Wirsing is a developmentally disabled person bom December 2, 1962, with an Intelligence Quotient in the upper 20s or lower 30s based on several reputable tests.
2. Donna Wirsing, the mother of Lora Faye Wirsing, is her guardian pursuant to appointment by the Genesee County Probate Court, and has petitioned the Court for authority to consent to the performing of sterilization procedure on Lora Faye Wirsing.
3. That Richard C. Wirsing, the father and other presumptive heir of Lora Faye Wirsing joins the mother/guardian in this request.
4. That the purpose of the sterilization procedure would be to protect the ward from becoming pregnant and from giving birth to a child she would be totally incapable of caring for.
5. That the ward does not ovulate on a regular basis, but could begin ovulating at any time making her physically subject to pregnancy.
6. That the ward is apparently not sexually active, and the parents by keeping a close watch on their daughter have to the best of their ability protected and shielded her from situations that could lead to sexual activity.
7. That the parents are loving and devoted parents who have the best interests of their daughter at heart, and have given her every opportunity and encouragement to develop within her limitations, and the daughter has achieved to the utmost of her ability.
8. That Lora Faye Wirsing has no ability to understand the relationship between sexual intercourse and pregnancy.
9. That Lora Faye Wirsing has no understanding of the birth process.
10. That Lora Faye Wirsing has no ability to make an informed consent to intercourse.
11. That Lora Faye Wirsing has no ability to care for a child.
12. That other non-surgical means of pregnancy prevention are not suitable because of Lora Faye Wirsing’s inability to understand the use of contraceptives and the possible significant negative medical effects of long term use of birth control pills.
13. That developmentally disabled individuals are frequently the victims of sexual abuse.
14. That a tubal ligation is the safest and least intrusive means of surgical sterilization of a female, and subjects the patient to no undue risk.
15. That a pregnancy and birth may carry a greater risk physically and psychologically to Lora Faye Wirsing than a tubal ligation.
16. That a tubal ligation for the sole purpose of sterilization is available to a competent female upon request.
17. That the ward, based on the Court’s finding, [sic] in appointing plenary guardian cannot consent to the procedure herself.
18. That no physician will perform and no hospital will allow a sterilization procedure to be performed on a developmentally disabled person without Court Order authorizing the guardian to consent.
19. That there is no Michigan statute concerning sterilization of developmentally disabled persons.
On the basis of these factual findings, the probate court authorized the guardian to consent to the procedure for the ward. Mpas appealed in the Genesee Circuit Court, which affirmed. The Court of Appeals denied leave to mpas, which then applied for leave to appeal to this Court. This Court, in lieu of granting leave, directed the Court of Appeals to determine, as on leave granted, without restriction, “whether probate judges possess the power to authorize a guardian to consent to the sterilization of a developmentally disabled citizen.” 441 Mich 886 (1992).
On remand, the Court of Appeals reversed the decision of the probate court. 214 Mich App 131; 542 NW2d 594 (1995). The Court of Appeals reasoned that the 1974 revision of the Mental Health Code, MCL 330.1600 et seq.) MSA 14.800(600) et seq., eliminated the authority of the probate court to authorize a guardian to consent to the sterilization of a ward. We granted the guardian leave to appeal, and now reverse.
Probate courts are courts of limited jurisdiction. Const 1963, art 6, § 15. The jurisdiction of the probate court is defined entirely by statute. In re Kasuba Estate, 401 Mich 560; 258 NW2d 731 (1977).
The history of sterilization of mentally ill and developmentaJly disabled persons in Michigan began in 1897, when a bill was introduced in our Legislature to utilize sterilization to prevent “idiocy.” As may be gathered from the terminology employed, the reasoning underlying this proposed legislation was of a sort no longer condoned by a large portion of society. While this bill failed, a similar act, 1913 PA 34, later became law, applying to those persons who were “mentally defective” and supported at public expense in public institutions. We found that statute constitutionally deficient on equal protection grounds in Haynes v Lapeer Circuit Judge, 201 Mich 138; 166 NW 938 (1918).
A subsequent act, 1923 PA 285, was upheld by this Court in Smith v Wayne Co Probate Judge, 231 Mich 409; 204 NW 140 (1925). That act applied to mentally defective persons. It was replaced by 1929 PA 281, allowing sterilization of insane and mentally ill persons to prevent them from procreating.
While these later acts authorized the application by a parent for sterilization of a child, as was the case in Smith, the bulk of applications, as the parties here agree, came from the administrators of various institutions for the sterilization of the wards under their care.
In 1974, our Legislature undertook a complete revision of the statutes dealing with mentally ill and developmentally disabled persons. The resulting Mental Health Code, MCL 330.1600 et seq.) MSA 14.800(600) et seq., repealed 1929 PA 281. This new Mental Health Code did not mention sterilization or, for that matter, any medical procedures. Presumably, § 602’s reference to utilizing a guardianship “to promote and protect the well-being of the individual” contemplated the provision of necessary medical assistance.
In 1977, the Legislature passed MCL 330.1629; MSA 14.800(629), which concerned a guardian’s consent to ordinary medical procedures on behalf of a ward. The 1978 amendment of this section added a reference to “extraordinary procedures,” specifically including sterilization. MCL 330.1629; MSA 14.800(629) currently reads as follows:
(1) A guardian, temporary guardian, plenary, partial, or standby guardian shall not be liable for civil damages by reason of authorizing routine or emergency medical treatment or surgery or extraordinary procedures when previously ordered by the court for his or her ward if the guardian acted after medical consultation with the ward’s physician, acted in good faith, was not negligent, and acted within the limits established for the guardian by the court.
(2) A guardian, temporary guardian, plenary, partial, or standby guardian who has been authorized by the court to give medical consent, shall not be liable by reason of his or her authorization for injury to the ward resulting from the negligence or other acts of a third person.
(3) Routine medical services do not include extraordinary procedures. Extraordinary procedures includes, but is not limited to, sterilization, including vasectomy, abortion, organ transplants from the ward to another person, and experimental treatment.
This case involves a petition by a plenary guardian. The duties of a plenary guardian are defined by MCL 330.1631; MSA 14.800(631). Subsection 1 of that section defines the relevant duties in this matter:
To the extent ordered by the court, the plenary guardian of the person shall have and a partial guardian of the person may have among others the following duties:
(a) Custody of the ward.
(b) The duty to make provision from the ward’s estate or other sources, for the ward’s care, comfort, and maintenance.
(c) The duty to make a reasonable effort to secure for the ward training, education, medical and psychological services, and social and vocational opportunity as are appropriate and as will assist the ward in the development of maximum self-reliance and independence.
In view of the above, we are able to answer this question with the application of a rule so basic that it predates the history of the sterilization statutes. When interpreting statutes, “[t]he fair and natural import of the terms employed, in view of the subject matter of the law, is what should govern.” People ex rel Twitchell v Blodgett, 13 Mich 127, 167 (1865) (opinion of Cooley, J., citations omitted). While not discounting the languishing of this matter in the courts for over eleven years, we find the statute to plainly contemplate the probate court’s authorization of a guardian to consent to extraordinary medical procedures, specifically including sterilization.
The Court of Appeals majority failed, as noted by the dissent below, to distinguish between the unfortunate history of forced eugenic sterilization and the separate concept of voluntary sterilization. Our decision here is based on the later concept. Nothing in this decision should be interpreted as an endorsement of a return to the routine sterilization system of the past, as MPAS argues may occur. Indeed, our decision here is based on the Legislature’s sound determination of the probate court’s role, and we have every confidence that the probate courts of our state will diligently carry out that role, limiting extraordinary procedures to only those situations in which they are appropriate. Our Legislature halted the routine involuntary sterilizations of the past, but our approval of this effort must not cloud our recognition of the Legislature’s authorization of the availability of sterilization as a voluntary extraordinary procedure.
We have previously recognized that, where an individual is unable to exercise an important right, a substituted-judgment analysis may be appropriate. In re Martin, 450 Mich 204; 538 NW2d 399 (1995). In Martin, we also noted that in those cases, such as this, in which a person has never been able to make a decision in the context of an important right, an objective best-interests standard might be appropriate. Id. at 223, n 15.
In this case, the ward is unable to choose for herself whether she wishes to become pregnant. To deprive her of the option of sterilization, in addition to affronting the statute, would make the choice for her, and make the same choice for each ward, regardless of the circumstances. This result comports neither with the statute nor the best interests of the individual ward.
What the Legislature has instead provided is a mechanism designed to encourage a guardian, upon concluding it is in the ward’s interests, to apply to the probate court for an order authorizing consent for an extraordinary procedure such as sterilization. The probate court shall then evaluate the case, and, if it is persuaded and finds that the procedure is in the ward’s best interests, order the authorization of consent.
We find that to be exactly what happened here. The guardian articulated reasons for believing this procedure was in the ward’s best interests, and supported those reasons with evidence. The probate court concluded that such a procedure indeed was in the ward’s best interests and authorized it. In these matters, where the ward cannot exercise personal judgment, the decision passes to the guardian. In this case, the probate court appropriately evaluated the evidence to insure that the decision made was indeed in the ward’s best interests.
We specifically decline to hold that a “clear and convincing” evidence standard is required in these matters, entrusting the probate court to exercise its sound discretion in deciding whether an extraordinary procedure is in the ward’s best interests. A review of the record leaves us convinced that the probate court carefully and thoughtfully carried out its role and made a well-reasoned decision.
Accordingly, we hold that the probate court has jurisdiction to hear an application by a guardian for authorization to consent to an extraordinary procedure under MCL 330.1629; MSA 14.800(629), including sterilization, and to order such authorization if it determines the procedure is in the ward’s best interests. We reverse the decision of the Court of Appeals and reinstate the August 1, 1990, order of the Gene-see County Probate Court allowing the guardian to consent to the performance of a tubal ligation on her ward.
Mallett, C.J., and Brickley, Boyle, Weaver, Kelly, and Taylor, JJ., concurred with Cavanagh, J.
See Brakel, The Mentally Disabled and the Law (3d ed), p 522. | [
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Weaver, J.
We granted leave in this case to determine whether the Police Officers Labor Council or the Police Officers Association of Michigan (poam) has the responsibility to pursue a grievance filed by plaintiff Quinn, who was discharged by the Port Huron Police Department. The Michigan Employment Relations Commission determined that the Labor Council was responsible for processing plaintiff’s grievance. However, the Court of Appeals reversed the merc’s decision and held that the poam, the newly certified union, had the duty to continue Quinn’s representation. We reverse the decision of the Court of Appeals and hold that the Labor Council is responsible for pursuing the grievance filed during its period of exclusive representation.
i
Plaintiff, who was a communications operator for the Port Huron Police Department, was discharged on August 25, 1992, for improper conduct. This conduct allegedly included gambling activities, misuse of emergency phone lines, and divulging confidential information to outside sources. On August 26, 1992, the Labor Council filed a grievance on plaintiff’s behalf. At the time the grievance was filed, the Labor Council was the exclusive representative of the City of Port Huron communications operators. Although the collective bargaining agreement had expired on June 30, 1991, the city had agreed that the grievance procedure would continue after expiration of the contract. While the grievance was being processed, a petition was filed on September 21, 1992, to replace the Labor Council as the certified representative of communications operators. An election was held on October 27, 1992, and, on November 23, 1992, the merc certified the poam as the new exclusive representative.
On November 16, 1992, one week before the POAM’s certification, the Labor Council sent a letter to the poam advising it that plaintiff’s grievance had been filed for arbitration and that the parties had agreed that Ildiko Knott would hear the matter on January 11, 1993. The letter indicated that because the POAM had become the certified bargaining agent, the matter was now its responsibility. However, the POAM asserted that the grievance remained the Labor Council's responsibility.
Plaintiff stated that, in November 1992, he was notified that the Labor Council would no longer represent him and that the POAM would handle the matter. Plaintiff provided the POAM with his paperwork. He stated that, in December 1992, the POAM returned the paperwork and informed him that it was not responsible for processing the grievance. Plaintiff filed an unfair labor practice charge against both the Labor Council and the POAM on April 2, 1993.
A hearing referee recommended that the POAM, as the newly elected exclusive representative, was responsible for processing the grievance and had breached its duty of fair representation by failing to do so. The MERC disagreed with the hearing referee’s recommendation and, in a two to one decision, ordered the Labor Council to process the grievance. The Court of Appeals reversed the MERC’s decision. 216 Mich App 237; 548 NW2d 692 (1996). We granted leave to appeal. 454 Mich 906 (1997).
II
The MERC’s factual findings are conclusive “if supported by competent, material, and substantial evidence on the record considered as a whole.” Port Huron Ed Ass’n v Port Huron Area School Dist, 452 Mich 309, 322; 550 NW2d 228 (1996). The MERC’s legal rulings, which are accorded a lesser degree of deference, “are set aside if they are in violation of the constitution or a statute, or affected by a substantial and material error of law.” Id. at 323.
The Court of Appeals noted that, under federal law, a union’s duty of fair representation arises out of its authority as the exclusive bargaining representative. See Adcox v Teledyne, Inc, 21 F3d 1381, 1386 (CA 6, 1994); Pratt v UAW Local 1435, 939 F2d 385, 388 (CA 6, 1991). The Court of Appeals determined that because MCL 423.211; MSA 17.455(11) provides that the elected representative is the exclusive bargaining representative of public employees, the poam became the exclusive representative upon certification, and the Labor Council, consequently, lost such status. Quinn, supra at 240. Therefore, applying Adcox and Pratt, the Court determined that the poam owed a duty of fair representation to plaintiff once it was certified. Id. The Court of Appeals rejected the poam’s policy concern that it should not be bound to pursue grievances filed by the Labor Council, noting that a new union must evaluate pending grievances to determine the proper course of action and that a union has authority to consider the merits of pending grievances. Id. at 240-241.
The Court of Appeals also noted that it had issued conflicting unpublished opinions regarding the matter. Id. at 238, n 1. In Burns v Michigan AFSCME Joint Council 25, issued April 5, 1989 (Docket No. 97420), the Court of Appeals accepted the decertified union’s argument that the duty of fair representation ended with the union’s decertification and its subsequent action to protect the plaintiffs’ rights. However, in Tucker v Michigan Ass’n of Public Employees, issued December 15, 1995 (Docket No. 166914), the Court rejected the union’s argument that its duty of fair representation did not extend beyond the expiration of the collective bargaining agreement and the certification of a new exclusive bargaining representative.
Although the Court of Appeals is correct that a union’s authority is premised on its status as an exclusive representative, we find that this principle fails to adequately address the respective responsibilities of the decertified and the newly certified union in this situation and fails to balance the interests of the parties involved. In United States Gypsum Co v United Steelworkers of America, AFL-CIO, 384 F2d 38, 44-45 (CA 5, 1967), the successor purchaser of the employer’s business argued that the union’s decertification extinguished its obligation to recognize the union or to submit grievances asserted by the union under the contract to arbitration. The federal court rejected the successor’s broad claim that, after decertification, the union had no right to enforce the agreement or any of its provisions. The court stated:
It must be borne in mind that what we are talking about relates only to the right of the Union to act as the champion for the employees to assert their substantive rights under the contract. The duration in time of the substantive rights themselves is not affected by decertification. Decertification cannot ordinarily extinguish substantive rights. But it might have a powerful effect on whether the union can champion those rights. This problem essentially comes down to the judge-made balancing of competing factors.
On the one hand is the reflex to the statutory duty to deal only with the representative chosen by the majority. The duty to deal is strong. But no less stringent is the duty not to deal with one having only minority support. But to take the easy, almost mechanical, doctrinaire approach that loss of majority status extinguishes the union’s power (duty) to act ignores other vital interests — indeed, interests which need protection and which will be lost unless an ardent advocate of them is available. [Id. at 45.]
The federal court determined that the union had the right to assert grievances for which effective relief was available before decertification. Id. at 46.
The federal court also rejected the argument that decertification deprived the union of standing to pursue a grievance in International Union, United Automobile, Aerospace & Agricultural Independent Workers of America v Telex Computer Products, Inc, 816 F2d 519, 522-524 (CA 10, 1987). The court stated that, while decertification may change relations between and among employer, union, and employees, it did not destroy “the right to redress arising under and relating to a valid preexisting contract.” Id. at 523. Although the collective bargaining agreement had expired in this case, the City of Port Huron had agreed that the grievance procedure would continue after the contract’s expiration. This Court has held that “[t]he obligation to arbitrate grievances postcontract encompasses grievances involving employee rights that accrue or vest under the contract, or situations in which the parties expressly provided for arbitration beyond the term of the agreement.” Gibraltar School Dist v Gibraltar MESPA-Transportation, 443 Mich 326, 328; 505 NW2d 214 (1993).
The Telex court, in recognizing the policy considerations that supported its decision to permit the union to pursue the grievance, stated:
The Union negotiated the contract, administered it during its term, and is best situated to interpret and enforce its provisions advantageously for the employees, especially since no other labor organization has been selected by the employees. It also brought the grievance in question and is in the best position knowledgeably and efficiently to see it to completion, absent a showing that some other organization can and will do so. Since the Union is the named party to the contract, it is accorded the prima facie right to proceed under the contract against the employer. Further delays, confusion, and legal entanglements await any attempt to substitute parties or permit intervention by one or more employees who may be proceeding on an individual rather than collective interest basis. [Id. at 523-524.]
In the present case, the Labor Council, which was the exclusive representative when plaintiff was discharged, filed the grievance, decided to arbitrate the grievance, selected the arbitrator, and set the date for arbitration. Consequently, although a new representative was certified thereafter, the Labor Council is in the best position to efficiently and knowledgeably see the grievance to its completion, and it would not effectuate the intent of the labor statutes to allow it to walk away from the grievance proceeding. Moreover, as noted in the MERC decision, shifting the responsibility from the Labor Council to the poam improperly imposes the Labor Council’s judgments, contract interpretations, and financial considerations made in this matter upon the poam.
The grievance arose and was actively pursued while the Labor Council was the exclusive representative. Therefore, we reverse the decision of the Court of Appeals and conclude that the Labor Council has the obligation to process the grievance to its completion.
Mallett, C.J., and Brickley, Cavanagh, Boyle, and Kelly, JJ., concurred with Weaver, J.
Taylor, J., took no part in the decision of this case.
Because our state labor statutes are patterned after the National Labor Relations Act, we examine federal construction of analogous provisions of the NLRA for guidance in construing our own labor statutes. Demings v City of Ecorse, 423 Mich 49, 56; 377 NW2d 275 (1985).
We note that the mjrb has found that a predecessor union’s refusal to process a pending grievance was not “so unreasonable as to violate its duty of fair representation” where the state of the law concerning its duty was unclear. See Local 888, American Federation of Gov’t Employees and Hector Gunaratne, Elsie Pascoe, and Charles Irizarry, 323 NLRB 123; 1997 WL 263052, *7.
See also Local 368, United Federation of Engineers, Int’l Union of Electrical, Radio & Machine Workers, AFL-CIO v Western Electric Co, Inc, 359 F Supp 651, 654 (D NJ, 1973) (subsequent expiration of an agreement and decertification do not affect a union’s standing to prosecute claims that arose when the agreement was in effect), and United Steelworkers of America v Keystone Croup, unpublished opinion of the United States District Court, Southern District Indiana, 1985 WL 14179, *2 (SD Ind, 1985) (a union was not precluded from enforcing an agreement when a dispute arose before decertification).
In Gibraltar, supra at 329, this Court inferred that the expired contracts were not automatically renewed.
We note that nothing in this opinion should be construed as preventing the new representative from voluntarily assuming pursuit of existing grievances, provided the aggrieved employee or employees consent to the new representative’s assumption of the duty. Further, we note that this situation does not concern a competing union claiming to be the contemporary bargaining representative. | [
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Taylor, J.
i
In this appeal we are asked to determine whether a sentencing court may order a defendant to pay restitution to compensate all the victims who were defrauded by his criminal course of conduct, even though the specific criminal acts committed against some of these victims were not the basis of the defendant’s conviction. We hold that the Crime Victim’s Rights Act, MCL 780.766; MSA 28.1287(766), provides a sentencing court with the authority to order such restitution.
n
In early 1992, Barry Baldwin decided to sell his Wilderness trailer motor home. Baldwin entered into a consignment sales agreement with defendant. Pursuant to the agreement, Baldwin’s vehicle was displayed on defendant’s high-visibility sales lot, Grandville Service and Repossessions, with the intent that defendant’s sales force would sell the vehicle. They agreed that defendant would receive four percent of the sales price as a commission. At the onset, Baldwin told defendant that he would sell the trailer for no less than $7,000. Subsequently, Baldwin agreed to sell the motor home for $5,900 after one of defendant’s salesmen, allegedly acting as an intermediary between a prospective buyer and Baldwin, told him the trailer would sell at that price. After the trailer was sold, defendant gave Baldwin a check for $5,900. Defendant purportedly waived his four-percent commission because the selling price was well below what Baldwin originally anticipated.
Later that year, Baldwin discovered that defendant had actually sold the trailer for $7,000. Baldwin went to defendant and demanded payment of the $1,100 difference between the actual sales price and the amount that defendant led Baldwin to believe the vehicle sold for. Rather than pay Baldwin, defendant ultimately told him to contact defendant’s attorney.
The evidence presented at trial demonstrated that defendant had contemporaneously perpetrated this same scheme on other individuals who sold their vehicles on consignment with him. Defendant told John Ausema that his car had sold for $11,300 when in fact it had been sold for $11,900. Defendant told Burt Irish that his van sold for $5,700 when in fact it sold for $6,500. Defendant paid Joseph Casares $2,000 after his car was sold, implying that it had sold for that amount plus the four-percent commission. However, Casares’ car sold for approximately $3,300. Defendant told Kevin Bryde that his automobile sold for $1,700 when in fact it had sold for $2,500. Defendant told Melinda Stuart that her car sold for $2,300 when in fact it sold for $2,600.
Responding to allegations raised by various individuals, the Grandville Police Department and the Michigan Department of State, Bureau of Automotive Regulations, investigated defendant’s consignment sales activities. Defendant was subsequently charged with four counts of embezzlement. Each count related to a different alleged victim, i.e., James Kolberg, Barry Baldwin, Kevin Bryde, and William DeBoer. After the preliminary examination, defendant was bound over on the counts involving Baldwin and Bryde. However, pursuant to defendant’s motion to sever, the trial court ordered that separate trials be conducted on each count. Trial was first conducted on the count involving Baldwin. The jury found defendant guilty.
After defendant was convicted, a presentence investigation report was prepared. MCL 771.14; MSA 28.1144. It indicated that the Grandville Police Department believed defendant’s scheme began sometime in early 1992 and that the department continued to receive calls from additional victims who were similarly swindled by defendant. The presentence report quoted a Bureau of Automotive Regulations investigator as saying that “the State originally had 48 counts against the defendant involving transactions like the Baldwins, that went on for over a year.” The probation officer indicated that he had personally spoken with sixteen individuals who claimed that defendant had told them that their vehicles were sold for less than the actual sales price. On the basis of his accounting of known victims, the probation officer recommended the court immediately order defendant to pay $28,260 in restitution and that the court reserve the right to assess additional restitution in the future.
Defendant filed an objection to the presentence report, denying that there were forty-eight victims similarly situated to Baldwin. Defendant also requested “that a specific breakdown be provided to him regarding the approximate $28,000 in restitution since the Baldwin matter involved approximately $1,100 as the claimed difference.” At sentencing, defendant raised a generalized objection to the uncertainty regarding the number of victims the recommended restitution amount was intended to compensate.
The court sentenced defendant to a term of two to ten years incarceration. As a condition of parole, the court ordered that defendant pay $25,000 in restitution. This amount reflected the amount recommended in the presentence report less an adjustment correcting an inaccuracy brought to the court’s attention by one of defendant’s other victims. The court indicated that the Parole Board should determine what each victim should receive, that it should seek additional restitution if warranted, and that the failure to pay more than what was owed would not be a violation of defendant’s parole.
On appeal, the Court of Appeals vacated the order of restitution. Noting that Baldwin had only been cheated out of $1,100, the appellate court correctly found that the restitution order was designed to compensate other victims in addition to Baldwin. Concluding that restitution may only be imposed with respect to a loss caused by the veiy offense for which defendant was tried and convicted, the Court of Appeals vacated the restitution order and remanded the case to the trial court. Unpublished opinion per curiam, issued January 16, 1996 (Docket No. 172159). The prosecution appealed to this Court, and we granted leave to appeal. 454 Mich 873 (1997). We now reverse and reinstate the trial court’s order of restitution.
m
A. SCOPE OF RESTITUTION UNDER THE CRIME VICTIM’S RIGHTS ACT
The prosecutor argues that the Court of Appeals erred in vacating the sentencing court’s restitution order. He argues that the plain language of the Crime Victim’s Rights Act, specifically MCL 780.766(2); MSA 28.1287(766)(2), authorizes the sentencing court to order criminal defendants to pay restitution to all victims, even if those specific losses were not the factual predicate for the conviction. We agree.
It is the primary rule of statutory construction that the plain language of the statute be enforced. Lorencz v Ford Motor Co, 439 Mich 370, 376; 483 NW2d 844 (1992), criticized on other grounds in Gross v General Motors Corp, 448 Mich 147, 165; 528 NW2d 707 (1995), City of Lansing v Lansing Twp, 356 Mich 641, 648-650; 97 NW2d 804 (1959). MCL 780.766(2); MSA 28.1287(766)(2), in effect at the time of defendant’s sentencing, provided:
The court, when sentencing a defendant convicted of a crime, may order, in addition to or in lieu of any other penalty authorized by law or in addition to any other penalty required by law, that the defendant make restitution to any victim of the defendant’s course of conduct which gives rise to the conviction ....
As is apparent, the statute clearly states restitution may be ordered with respect to “any” victim.
The remaining question is whether “course of conduct” should be given a broad or narrow construction. The history of that phrase as it came to be used in the Crime Victim’s Rights Act demonstrates that it should be given a broad construction to encompass the restitution order at issue here.
Initially, this phrase appeared in cases addressing the proper scope of restitution ordered as a condition of probation pursuant to MCL 771.3(2); MSA 28.1133(2). That statute provided: “As a condition of probation, the court may require the probationer to do 1 or more of the following: . . . Pay restitution to the victim . . . .” Cases arose under this statute where trial courts ordered criminal defendants to pay restitution that exceeded the losses attributable to the specific charges that resulted in the defendant’s conviction. As in the present case, these defendants claimed the restitution orders were improper. Our courts determined that such restitution orders were appropriate because principles of justice required that the defendant “pay back the entire amount obtained by his course of criminal conduct.” People v Seda-Ruiz, 87 Mich App 100, 103; 273 NW2d 602 (1978). See also People v Nawrocki, 8 Mich App 225; 154 NW2d 45 (1967); People v Gallagher, 55 Mich App 613; 223 NW2d 92 (1974); People v Pettit, 88 Mich App 203; 276 NW2d 878 (1979).
With this historical background, and aware of the construction of MCL 771.3; MSA 28.1133 the Legislature enacted the Crime Victim’s Rights Act and incorporated the term “course of conduct” in defining the scope of a proper restitution order. This phrase having acquired a unique meaning at common law, the meaning is carried over to the interpretation of the subsequent statute dealing with the same subject matter absent any direction to the contrary by the Legislature. People v Reeves, 448 Mich 1, 8; 528 NW2d 160 (1995); Nation v W D E Electric Co, 454 Mich 489, 494-495; 563 NW2d 233 (1997). Because there was no indication from the Legislature that the common-law meaning was not being incorporated, this phrase “course of conduct” should be given the broad meaning the courts had earlier stated. Thus, the defendant should compensate for all the losses attributable to the illegal scheme that culminated in his conviction, even though some of the losses were not the factual foundation of the charge that resulted in conviction.
Under the Crime Victim’s Rights Act the trial court’s restitution order was proper. Defendant repeatedly told his customers that their cars or trailers sold for less than the true amount of the sale, and kept the difference for himself. This repeated scheme to defraud his customers in the same or similar manner falls within the broad meaning of “course of conduct” contained in the statute. Pursuant to MCL 780.766(2); MSA 28.1287(766)(2), the court had the statutory authority to order restitution to compensate any victim of defendant’s illegal scheme.
B. DUE PROCESS
Having concluded that the Legislature authorized restitution to any victim of the defendant’s criminal course of conduct, we next address defendant’s argument that this statutoiy scheme violates the Fifth and Fourteenth Amendments of the United States Constitution. Defendant argues that the restitution order was constitutionally repugnant because the crimes by which the other victims were defrauded were not proven beyond a reasonable doubt. Thus, according to defendant, ordering him to compensate these other victims deprived him of due process of law. We disagree.
Initially, we note that defendant and the Court of Appeals relied on language in People v Becker, 349 Mich 476; 84 NW2d 833 (1957), and cases citing that opinion, as support for the conclusion that the restitution order must be vacated. In Becker, this Court stated that restitution
can be imposed only as to loss caused by the very offense for which defendant was tried and convicted. As to the other crimes or offenses there has been no fixing of [defendant’s] liability therefor in a constitutional sense. [Id. at 486.]
While this passage facially supports defendant’s argument, the Court of Appeals reliance on this language is flawed. First, the Court of Appeals failed to appreciate that at the time Becker was decided eight justices sat on this Court and only three justices concurred with the reasoning of the opinion. The remaining four justices concurred in the result only. “Plurality decisions in which no majority of the justices participating agree as to the reasoning are not an authoritative interpretation binding on this Court under the doctrine of stare decisis.” Negri v Slotkin, 397 Mich 105, 109; 244 NW2d 98 (1976). Thus, Becker is not controlling precedent, and the panel below erred in treating it as such.
Additionally, Becker does not support the conclusion that the restitution order at issue here is uncon stitutional because the opinion specifically distinguishes its facts from facts similar to those presented. In Becker, the defendant negligently struck two pedestrians with his automobile and unlawfully left the scene of the accident. The defendant pleaded guilty of leaving the scene of an accident. As a term of his probation, the sentencing court ordered him to pay $1,244 in restitution to the victims to compensate them for their medical expenses. This Court stated:
The problem of the validity of requiring “restitution” as a condition of probation in a criminal case of this type presents serious constitutional problems. (We say “of this type” because in those cases where the criminal defendant has, for instance, been found guilty of embezzlement from his employer, and is required to restore the embezzled funds as a condition of probation, there is no serious question that the requirement imposed comes within the meaning of the term “restitution” as employed in the statute. But such is not our problem.) [Id. at 479.]
Thus, it is plain that the panel in Becker did not mean to apply its discussion to a case such as ours in which the defendant has embezzled funds in the course of his business.
Realizing that Becker is not dispositive, we turn to the Crime Victim’s Rights Act to determine if it affords criminal defendants adequate process so that there is no constitutional violation. It does because a sentencing scheme that requires proof by only a preponderance of the evidence passes constitutional muster. This statute affords that level of process. MCL 780.767(4); MSA 28.1287(767)(4) provides “[a]ny dispute as to the proper amount or type of restitution shall be resolved by the court by a preponderance of the evidence.” That subsection also requires that the prosecution must establish the appropriate amount of restitution by a preponderance of the evidence. Thus, the statute affords defendant an evidentiary hearing when the amount of restitution is contested and further provides that the prosecution bears the burden of establishing the proper amount.
Although defendant did not receive such an evidentiary hearing, that does not give rise to error in this case because, as the Court of Appeals correctly noted below, at sentencing defendant did not request an evidentiary hearing regarding the amount of restitution that was properly due. This was a waiver of his opportunity for an evidentiary hearing and he cannot now argue that he was denied due process.
We note that the Crime Victim’s Rights Act contains additional procedural safeguards that ensure that defendants are afforded due process. MCL 780.766(14); MSA 28.1287(766)(14) precludes a defendant from being incarcerated for failure to pay the restitution ordered, absent the court or the Parole Board determining that the defendant has the resources to pay, but has not made a good-faith effort to do so. MCL 780.766(12); MSA 28.1287(766)(12) authorizes the court to modify the method of payment if the court determines that payment under the order will impose a manifest hardship on the defendant or his immediate family. Consequently, the Crime Victim’s Rights Act not only complies with due process by affording defendants an evidentiary hearing to establish the proper amount of restitution, it also contains additional safeguards that prevent deprivation of liberty when criminal defendants are actually unable to compensate their victims.
IV
CONCLUSION
In sum, we hold that the sentencing court did not exceed its statutory authority in ordering restitution intended to compensate victims who were defrauded by defendant’s course of criminal conduct, even though these losses were not the specific factual predicate of the defendant’s conviction. Furthermore, the Crime Victim’s Rights Act provides criminal defendants adequate process. We therefore reverse the decision of the Court of Appeals and reinstate the order of restitution.
Mallett, C.J., and Brickley, Cavanagh, Boyle, Weaver, and Kelly, JJ., concurred with Taylor, J.
Baldwin told defendant he was still willing to pay the four-percent commission.
The purchaser testified that she paid either $3,400 or $3,600.
Defendant subsequently pleaded guilty to the count involving Bryde. For this conviction defendant was sentenced to five-years probation, $1,000 in fines and full restitution. The transcript of this proceeding was not included in the record on appeal. Consequently, we are unable to discern the scope of restitution (if any) agreed to by defendant at that proceeding.
In this regard, defense counsel stated:
Secondly, your Honor, there is a threshold issue here concerning exactly what Mr. Gahan is being sentenced for. It’s an important issue whether or not he’s being sentenced for 48 customers, for 5 or 6 customers, in terms of the 404B evidence that was admitted at trial, or for Mr. Baldwin.
In any one of these circumstances, whether he is being sentenced for Mr. Baldwin $1,100, whether he is being sentenced for 48 unlisted customers with a restitution amount of $28,260, or something in between.
Defendant had apparently sold the vehicle of one Mr. Foster, but had entirely failed to forward the proceeds of the sale to him. The presentence report relied on a sales price of $15,000 in determining the appropriate amount of restitution. The court’s comments indicate that Foster’s attorney clarified that the vehicle sold for $11,500. In response to this information, the court reduced the recommended restitution to $25,000.
6 We note that pursuant to 1993 PA 341, subsection 16(2), the Legislature amended the statute to require, rather than permit, that restitution be ordered.
7 MCL 780.766(1); MSA 28.1287(766)(1) defines “victim,” for the purposes of this statute as “an individual who suffers direct or threatened physical, financial, or emotional harm as a result of the commission of a crime.”
In People v Grant, 455 Mich 221, 231-232, n 11; 565 NW2d 389 (1997), we observed similarities between MCL 780.766(2); MSA 28.1287(766)(2) and its federal counterpart, 18 USC 3663, with respect to the trial courts’ discretion to order restitution. Although the two share some similarities, the federal courts have interpreted the federal statute narrowly, holding, for example, that “a compensable injury must be caused by an act intended to aid the commission of the offense of conviction or in some other way be part of the same scheme as the offense of conviction.” United States v Miller, 900 F2d 919, 923 (CA 6, 1990). See also United States v Henoud, 81 F3d 484 (CA 4, 1996); United States v Silkowski, 32 F3d 682 (CA 2, 1994). The federal statute states that the court “may order . . . that the defendant make restitution to any victim of such offense . . . .”18 USC 3663(a)(1)(A) (emphasis added). We conclude that the absence of the phrase “course of conduct” and the use of the phrase “such offense” distinguishes the intent of the federal statute from the more broadly worded Michigan statute.
The statute has subsequently been amended in ways that do not affect this discussion.
Pursuant to 1985 PA 87 and 89, the Legislature enacted the Crime Victim’s Rights Act and also amended the Code of Criminal Procedure to authorize restitution in conjunction with a term of imprisonment. These statutes closely follow one another.
Although totally dissimilar crimes committed at different times may not satisfy the statutory “course of conduct” requirement, such facts are not presented in this case. Consequently, we need not attempt to define the exact parameters of that term on this occasion. In this case, defendant’s embezzlement scheme clearly falls within the confines of the term as it has developed in the case law preceding our decision today.
US Const, Am V provides in part that no person shall “be deprived of life, liberty, or property, without due process of law . . . .” US Const, Am XIV provides in part, “nor shall any State deprive any person of life, liberty, or property, without due process of law . . . .” Although defendant does not argue it, we presume that he also relies on Const 1963, art 1, § 17.
Chief Justice Dethmers and Justices Sharpe, Smith, Edwards, Voelker, H. F. Kelly, Carr, and Black.
This error was also committed by the panels in People v Goodchild, 145 Mich App 266; 377 NW2d 318 (1985), and People v Blaney, 139 Mich App 694; 363 NW2d 13 (1984), both cases disapproved on other grounds in People v Music, 428 Mich 356; 408 NW2d 795 (1987).
The United States Supreme Court recently clarified that a sentencing court may consider other conduct, not proven beyond a reasonable doubt, but established by a preponderance of the evidence, in determining the defendant’s sentence. United States v Watts, 519 US 148, 156-157; 117 S Ct 633; 136 L Ed 2d 554 (1997). The use of the preponderance of the evidence standard at sentencing generally complies with due process.
Rather, an attorney representing a defendant in a civil matter relating to one of the several victims defrauded by the defendant, informed the court that the restitution amount should be reduced to reflect the amount truly owed to that person. In response, the trial court reduced the restitution amount recommended in the presentence report to reflect this correction. Other than this, defendant did not offer any evidence or specific argument to demonstrate that the amount of restitution recommended in the presentence report was inaccurate. Although defense counsel made some general comments questioning the number of victims, “[o]nly an actual dispute, properly raised at the sentencing hearing in respect to the type or amount of restitution, triggers the need to resolve the dispute by a preponderance of the evidence.” Grant, n 8 supra at 243.
It is incumbent on the defendant to make a proper objection and request an evidentiary hearing. Absent such objection, the court is not required to order, sua sponte, an evidentiary proceeding to determine the proper amount of restitution due. Grant, n 8 supra at 243. See also People v Hart, 211 Mich App 703, 705; 536 NW2d 605 (1995). Instead, the court is entitled to rely on the amount recommended in the presentence investigation report “which is presumed to be accurate unless the defendant effec tively challenges the accuracy of the factual information.” Grant, supra at 233-234. | [
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Brickley, J.
This case arises out of a slip and fall accident. The plaintiff, Ms. Fauzie Bitax, was working for Beirut Bakeiy, Inc. Beirut Bakery, Inc., is a Michigan corporation whose stock is solely owned by the defendant, Mr. Iskandar Wakim. At the time of the accident, Mr. Wakim also personally owned the property where the bakery was located and leased the property to the bakery.
On the night of December 23, 1991, Ms. Bitar was taking trash out of the bakery to a dumpster at the rear of the property. As she was walking across the property, she slipped and injured her ankle. Ms. Bitar applied for, and received, worker’s compensation benefits under the bakery’s insurance policy. Ms. Bitar then sued Mr. Wakim personally, claiming that accumulated ice and snow in the parking lot had caused her fall.
Mr. Wakim moved for summary disposition in circuit court asserting the exclusive remedy provision of the Worker’s Disability Compensation Act. MCL 418.131; MSA 17.237(131). Mr. Wakim’s motion was granted. Ms. Bitar then appealed to the Court of Appeals, which affirmed the trial court. 211 Mich App 617; 536 NW2d 583 (1995). The Court of Appeals found that Mr. Wakim was entitled to a “reverse piercing” of the corporate veil. Id. at 621-622. Accordingly, Mr. Wakim and Beirut Bakery, Inc., were regarded as the same entity, and both were entitled to rely upon the exclusive remedy provision. Id. at 622. The Court of Appeals also found that the plaintiff could not sue Mr. Wakim under a dual capacity theory. Id. at 624.
We would reverse the judgment of the Court of Appeals and find that Mr. Wakim is not entitled to a reverse piercing of the corporate veil. Rather, under the equities of this case, the corporate structure should not be disregarded. Thus, Mr. Wakim is not entitled to protection under the exclusive remedy provision. This finding makes it unnecessary to reach the dual capacity issue.
I. PIERCING OF THE CORPORATE VEIL
It is clear that a shareholder is a separate legal entity from the corporation. Bourne v Muskegon Circuit Judge, 327 Mich 175, 191; 41 NW2d 515 (1950). This is true even when the corporation’s stock is owned by one individual. Id.] see also Bill Kettlewell Excavating, Inc v St Clair Co Health Dep’t, 187 Mich App 633, 639; 468 NW2d 326 (1991). As a general principle, this separation of identities is to be respected. Wells v Firestone Tire & Rubber Co, 421 Mich 641, 650; 364 NW2d 670 (1984).
However, the corporate structure will be disregarded when the equities are compelling. Id. at 651. In such cases, the corporate veil is “pierced” and the shareholders are held liable for the acts of the company. Courts will grant this remedy where honoring the corporate structure would subvert justice or perpetuate fraud. Wells at 650; Klager v Robert Meyer Co, 415 Mich 402, 411; 329 NW2d 721 (1982), United Armenian Brethren Evangelical Church v Kazanjian, 322 Mich 651, 658; 34 NW2d 510 (1948). This decision is based on a consideration of the facts and equities of the case. Klager, supra at 411.
Normally, a plaintiff seeks to avoid the corporate structure to force a shareholder to accept responsibil ity for a corporation’s actions. However, this Court has recognized that the equities of a given case may allow the shareholder to ignore the corporate form. In such a reverse piercing case, the shareholder and the corporation are treated as the same entity. In Wells, the plaintiff worked for a wholly owned subsidiary of a tire company. Wells, supra at 645-646. He was injured at work by a product made by the parent corporation and collected worker’s compensation from that corporation. He also sued the parent company, asserting products liability. The plaintiff argued that his suit was not barred by the exclusive remedy provision because the subsidiary, not the parent corporation, was his employer. Id. This Court concluded that it would be wholly inequitable, and contrary to public policy, to allow the plaintiff to treat the parent corporation as his employer in order to receive worker’s compensation benefits, and then to deny that the parent corporation was his employer in order to avoid the exclusive remedy provision. Id. at 652. Thus, this Court pierced the veil between the parent and the subsidiary and dismissed the case based on the exclusive remedy provision. Id. at 650-654.
The Court made a similar finding in Pettaway v McConaghy, 367 Mich 651; 116 NW2d 789 (1962). In that case, the defendant was the majority stockholder and director of a corporation that had employed the plaintiff. Id. at 652-653. The plaintiff alleged that the defendant’s modifications to a machine had resulted in injuries to the plaintiff. Id. at 653. The Court found there to be “such a complete identity between the defendant and the corporation as to suggest that one was simply the alter ego of the other.” Id. at 654. The Court then stated that the plaintiff’s suit would be defeated by the exclusive remedy provision if the corporate structure were ignored. However, the Court explained that this analysis was not employed by the lower courts, nor was it pursued by the parties on appeal. Id.
n. application
We find that the equities of this case do not require the application of Wells and Pettaway. Unlike Wells, and the cases following it, this case does not involve an attempt by an employee of a subsidiary company to state a cause of action against the parent corporation. Unlike the plaintiff in Wells, Ms. Bitar never claimed that Mr. Wakim was her employer in order to receive worker’s compensation benefits. Rather, she filed her worker’s compensation claim against the bakery, the entity that provided worker’s compensation coverage. Unlike Wells, there is no evidence that Ms. Bitar structured her cause of action in such a way as to reap all the benefits, and none of the drawbacks, of the Worker’s Disability Compensation Act. Rather, Ms. Bitar’s claims simply recognized the corporate structure established by the defendant. Further, we decline to follow the dicta found in Pettaway. Rather, we choose to approach this case in light of the facts presented. Klager, supra at 411.
The equities of this case do not merit a reverse piercing of Beirut Bakery’s corporate veil. First, Mr. Wakim chose to maintain the property in his own name and to lease it to the corporation. Presumably, this arrangement was advantageous to Mr. Wakim. We agree with the Court of Appeals statement in Williams v American Title Ins Co, 83 Mich App 686, 699; 269 NW2d 481 (1978), that those who create, and take advantage of, a corporate structure should not be allowed to disregard that structure when it suits their purposes.
Moreover, a reverse piercing of Beirut Bakery’s corporate veil is not required to prevent injustice. Ms. Bitar injured herself on property owned by a legal entity that was not her employer. Thus, she can bring a lawsuit against the owner of that property without violating the exclusive remedy provision of the Worker’s Disability Compensation Act. See 6 Larson, Workers’ Compensation, § 72.81(b), pp 14-290.93 to 14-290.94. The act prevents Ms. Bitar from filing a tort action against her employer because she is entitled to worker’s compensation benefits. However, it does not bar a premises liability action against a third party. Thus, neither the policies of the act, nor the interests of justice, require that Mr. Wakim be allowed to escape suit merely because he is the majority shareholder of Ms. Bitar’s employer.
in. CONCLUSION
Because Mr. Wakim is not to be viewed as Bitar’s employer, we do not need to reach Mr. Wakim’s defense under the dual capacity doctrine. Further, we note that the Michigan Self-Insurers’ Association, as amicus curiae, argued that subsection 827(1) of the act provides Mr. Wakim with a defense in this case, even if he is not found to be Ms. Bitar’s employer. However, this issue was not adequately developed by the lower courts or the parties. Therefore, we decline to comment upon it.
Mr. Wakim and the Beirut Bakery were separate legal entities at the time of Ms. Bitar’s fall. As the employer, the bakery should not be sued because of the exclusive remedy provision. However, the Court of Appeals erred when it allowed Mr. Wakim to use this provision to protect himself from suit as the premises owner. Therefore, we would reverse the Court of Appeals and would remand this case for further proceedings.
Cavanagh and Kelly, JJ., concurred with Brickley, J.
See, for example, Nardi v American Motors Corp, 156 Mich App 275; 401 NW2d 348 (1986). In cases involving a parent-subsidiary corporate structure, an economic realities test is used to determine which entity, or both, is the employer under the Worker’s Disability Compensation Act. We agree with the parties that this test does not apply to the case currently before the Court.
In view of the interest of the parties in the dual capacity doctrine, the parties were directed to file supplemental briefs on the question whether plaintiff-appellant’s suit is barred by MCL 418.827(1); MSA 17.237(827)(1) because defendant is a “natural person in the same employ” as plaintiff. After receipt of the additional briefing, the Court concluded that it should not depart from the well-established rule that issues not presented to the trial court or the Court of Appeals are not preserved for review by this Court. | [
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Mallett, C.J.
We granted leave in these consolidated cases to determine whether the Court of Appeals properly adopted the “manifestation trigger theory” to deny coverage under standard comprehensive general liability and umbrella excess insurance policies allegedly issued by the defendant insurers. The policies essentially provided coverage for an “occurrence” taking place within the policy period. Plaintiffs sought coverage for expenses relating to environmental clean-up actions where the contamination was discovered years after the policy periods had expired, but where it allegedly occurred while the policies were in effect. The Court of Appeals held that coverage under the policies was not triggered because the contamination was not discovered within the policy periods, i.e., it did not manifest within the policies’ effective dates. Because we find no support for the “manifestation trigger” in the relevant policy language, we reverse.
i
FACTS AND PROCEEDINGS
A
GELMAN SCIENCES
Plaintiff Gelman Sciences, Inc., manufactures microporous filters in a plant near Ann Arbor, Michigan. In 1964, it began using 1,4-dioxane on an experimental basis in its manufacturing process. From 1966 to 1984, Gelman regularly used 1,4-dioxane as a solvent to dissolve a polymer used in manufacturing filter sheets. Rinse water from the manufacturing process contained trace amounts of 1,4-dioxane. To dispose of this rinse water, Gelman utilized, pursuant to permit, a system of wastewater treatment ponds designed to biodegrade organic wastes. For two years in the late 1960s, treated water from one of the ponds leaked into a marshy area behind plaintiffs facility. Plaintiff consulted the Water Resource Commission and, pursuant to its suggestion, stopped the overflow by dredging out the bottom of the pond to allow the wastewater to seep into the ground. In the 1970s, Gelman, also pursuant to permit, began disposing of wastewater using a spray irrigation system. Gelman was allegedly unaware that these permitted waste systems would not biodegrade 1,4-dioxane. In 1985, the Washtenaw County Health Department discovered that certain drinking water wells located near plaintiffs facility were allegedly contaminated with 1,4-dioxane. The state and numerous private parties sued Gelman for damages relating to the groundwater contamination.
Plaintiff Gelman, for itself and on behalf of one of its insurers with whom it had settled, brought this action, seeking to establish that defendants owed a duty to indemnify and defend these lawsuits under various standard comprehensive general liability (CGL) and umbrella excess insurance policies allegedly in effect between the years 1963 and 1969. Although Gelman has not located the actual policies, it has listed the policy numbers of the various cgl and umbrella policies and quotes the language relating to coverage contained in the standard documents.
The trial court granted summary disposition for the insurers, finding that even if the policies in fact existed, coverage was not triggered because the groundwater contamination was not discovered until after they expired. The Court of Appeals affirmed on the trigger of coverage issue. 214 Mich App 560; 543 NW2d 38 (1995). We granted leave to appeal, limited to the issue whether the lower courts erroneously applied the date of manifestation of injury as the appropriate trigger of coverage for determination of insurance carrier responsibility to the insured.
B
ARCO INDUSTRIES
This Court recounted the following summary of the factual and procedural background in Arco Industries Corp v American Motorists Ins Co, 448 Mich 395, 399-401; 531 NW2d 168 (1995), when it was previously before us concerning a different issue:
Plaintiff Arco Industries Corporation is a small automotive parts manufacturer that has operated a manufacturing plant in Schoolcraft, Michigan, since 1967. As part of the manufacturing process, the automotive parts are dipped into liquid plastisol or vinyl. Volatile organic compounds (vocs) such as perchloroethylene, trichloroethylene, 1-2 dichloroethylene and vinyl chloride, were used to clean the parts during the manufacturing process and to remove plastisol from the plant floors. The plant floor was designed with a trench drain system that drained waste from the plant floor into an unlined seepage lagoon located in the back of the plant. As a result, vocs contaminated the seepage lagoon and ground water.
In November, 1985, the Department of Natural Resources notified Arco that the seepage lagoon was contaminated with vocs, and records indicated that Arco was the source of the contamination. After Arco’s failure to resolve the problem, the dnr filed suit against Arco in federal court in an attempt to compel Arco to remedy the voc contamination and collect claimed response costs. Subsequently, the State of Michigan and Arco entered into a consent decree whereby Arco agreed to pay the state $450,000 in response costs together with attorney fees. Arco also agreed to develop and implement a multimillion dollar ground water and soil remediation program.
Arco’s insurer, amico, refused to defend or indemnify in the underlying litigation alleging that the insurance contract did not cover this type of incident. As a result, on February 4, 1987, Arco filed suit against amico, seeking to compel the insurer to honor its contractual obligations. In response to the suit, amico’s defense was that this type of incident was not a covered “occurrence” within the meaning of the applicable comprehensive liability policies because Arco either expected or intended the pollution that resulted from its manufacturing process.
The trial court found that the contamination was not anticipated by Arco, and that there was no “showing that there was an intention by anyone to contaminate.” Thus, on September 28, 1990, a judgment was entered compelling amico to pay its allocated share (68.63 percent) of all indemnifiable losses up to the aggregate limits of amico’s coverage of $3.5 million.
The Court of Appeals, however, reversed the trial court’s decision and held that amico did not have the responsibility to defend or indemnify Arco. The Court held that there were clearly intentional discharges of vocs by Arco employees and Arco either should have foreseen the result of the intentional acts, knew, or should have known that such practices would result in a substantial probability that vocs would contaminate the soil and ground water. 198 Mich App [347] 352-353 [497 NW2d 190 (1993)].
This Court reversed and remanded, holding that a subjective, rather than an objective, standard applies to determining whether the insured expected or intended the harm. Arco, supra. On remand, the Court of Appeals again held that the defendants owed no duty of coverage, this time relying on the “manifestation trigger” theory to hold that because the contamination was not discovered during the policy peri ods, coverage had not been triggered. 215 Mich App 633; 546 NW2d 709 (1996). This Court granted leave on the trigger of coverage issue and consolidated the case with Gelman Sciences.
n
BACKGROUND
Comprehensive general liability policies insure against liabilities to third parties. The coverage typically is broad, extending generally to any business liability not expressly excluded. Since the early 1940s, the insurance industry has drafted and periodically revised the standard CGL policy. In the 1960s, it modified the standard CGL policy from insuring against “accidents” to insuring against “occurrences.” The standard CGL policies involved in these cases are primarily of this latter variety. They provide coverage for an “occurrence,” defined typically as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.”
Courts have typically had difficulty applying the standard CGL language in cases involving gradual, continuous, or delayed property damage from pollution. The apparent difficulty is in determining when cover age is triggered under the relevant policies when the actual damage is not discovered until years after the pollution began.
Courts and commentators have discussed four possible theories for determining what event or events trigger coverage under standard CGL policies. These are the “exposure,” “injury in fact,” “manifestation,” and “continuous” trigger theories. See, e.g., Ray Industries, Inc v Liberty Mut Ins Co, 974 F2d 754, 764-765 (CA 6, 1992). These various theories are relevant to the question when an occurrence takes place for purposes of determining if there is coverage under a particular insurance policy.
The exposure trigger places the “occurrence” at the earliest time, i.e., when the exposure to injury-causing conditions occurs. In the environmental pollution context, this is the date on which the pollution began. The manifestation theory places the “occurrence” at the latest possible time, i.e., when the property damage is ultimately discovered. Some courts describe this trigger as being when the injury manifests itself in the form of ascertainable property damage. The trigger under the injury-in-fact approach is actual property damage. Under this theory, the finder of fact must determine when exposure to the pollutants resulted in actual property damage in the facts of a given case. The final theory, known alternatively as the “continuous,” “triple,” or “multiple” trigger, holds that the injury occurs continuously from exposure until manifestation. Thus, all insurers who assumed risk from the initial pollution through discovery of property damage would be liable.
A
In the cases we review today, the Court of Appeals applied the manifestation theory to determine that the insurers owed no coverage. Before explaining why we are convinced that the manifestation approach is error, we will examine the Court of Appeals analysis.
In Gelman, the Court agreed with, and followed, the analysis in Mraz v Canadian Universal Ins Co, Ltd, 804 F2d 1325 (CA 4, 1986). In Mraz, the policyholders buried barrels containing chemical wastes in 1969. Contaminated soil and water were not discovered at the burial site until 1982. The policyholders sought coverage for losses relating to the contamina tion. The policy in Mraz contained language similar to the policies at issue: it covered losses for an “occurrence,” which was defined as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.” The Court quoted at length from Mraz:
“The general rule is that ‘[t]he time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed but the time when the complaining party was actually damaged.’ United States Fidelity & Guaranty Co v American Ins Co, 169 Ind App 1 [7]; 345 NE2d 267, 270 (1976). Often, these cases involve a wrongful act that produces no harm for a period of time and then suddenly manifests itself in a burst of damage. See, e.g., Travelers Ins Co v CJ Gayfer’s & Co, 366 So 2d 1199, 1202 (Fla App, 1979) (faulty roof drainage system finally leaks); Singsaas v Diederich, 238 NW2d 878, 880 (Minn, 1976) (collapse of negligently installed manlift); Peerless Ins Co v Clough, 105 NH 76 [78-79]; 193 A2d 444, 446 (1963) (fire in negligently built chimney).
“There are situations, however, in which the existence or scope of damage remains concealed or uncertain for a period of time even though damage is occurring. The leakage of hazardous wastes as in this case is a clear example. Determining exactly when damage begins can be difficult, if not impossible. In such cases we believe that the better rule is that the occurrence is deemed to take place when the injuries first manifest themselves. See Appalachian Ins Co v Liberty Mutual Ins Co, 676 F2d 56, 62 (CA 3, 1982); cf. Bartholomew v Appalachian Ins Co, 655 F2d 27, 28 (CA 1, 1981) (when the defect takes place or is discovered); Aetna Casualty & Surety Co v PPG Industries, Inc, 554 F Supp 290, 294 (D Ariz, 1983) (coverage is based upon the time the damage was discovered).
“Therefore, we hold that in hazardous waste burial cases such as this one, the occurrence is judged by the time at which the leakage and damage are first discovered.” [214 Mich App 567-568, quoting Mraz, supra at 1328.]
The Court of Appeals also stated that the trial court, in applying the manifestation trigger, had properly relied on Transamerica Ins Co v Safeco Ins Co, 189 Mich App 55; 472 NW2d 5 (1991). The policyholder in Transamerica installed urea-formaldehyde insulation in businesses and homes and sought coverage for losses relating to personal injuries sustained from exposure to harmful gases released by the insulation. The Court of Appeals in Gelman identified the issue in Transamerica as whether persons and property exposed to harmful gases were injured, for purposes of triggering coverage, when the insulation was installed or when the symptoms manifested themselves. The Court then stated that Transamerica held that coverage was triggered when the personal injury or property damage resulting from exposure manifested itself to the party claiming injury.
The Court also acknowledged cases from other jurisdictions rejecting the manifestation approach and distinguished them on the basis that in those cases, the environmental damage could be pinpointed either to a single discharge or to an exact time frame. Ray Industries v Liberty Mut Ins Co, supra, Upjohn Co v New Hampshire Ins Co, 178 Mich App 706; 444 NW2d 813 (1989), rev’d on other grounds 438 Mich 197; 476 NW2d 392 (1991), Inland Waters Pollution Control, Inc v Nat’l Union Fire Ins Co, 997 F2d 172, 179-189 (CA 6, 1993).
The Court of Appeals in Arco simply cited Gelman and Transamerica, without providing any further analysis, before applying the manifestation trigger to deny coverage.
in
LAW AND ANALYSIS
While the various trigger theories are useful to describe the outcomes reached by courts in different factual settings, we think that reference to trigger theories can be deceiving. Ultimately, it is the policy language as applied to the specific facts in a given case that determines coverage. In this regard we agree with the observations made by United States District Judge Churchill:
Comparison of the manifestation theory with the injury in fact theory is absolutely meaningless unless there is some real possibility of a substantial time lag between the actual injury and the resulting manifestation. Similarly, comparison of the injury in fact theory with the exposure theory means nothing unless the advocate of the exposure theory presses for a ruling that coverage was triggered prior to the point when injury in fact occurred. Moreover, in all of these scenarios, “real” or “actual” iqjury must be defined in temporal relation to initial exposure or ultimate manifestation. Any effort to logically organize all of the trigger cases along these lines would be perforce ineffectual. Consequently, trigger rulings are most appropriately derived by reference to the operative policy language, as opposed to the judicial gloss placed upon similar language in ostensibly analogous cases. [Dow Chemical Co v Associate Indemnity Corp, 724 F Supp 474, 479 (ED Mich, 1989).]
We find Judge Churchill’s comments particularly insightful. In reviewing several trigger cases from other jurisdictions, we think it apparent that some courts too quickly label the “trigger theory” they are supposedly applying without carefully considering the factual distinctions, or lack thereof, between exposure, injury in fact, and manifestation. Even more troubling, some courts are too hasty in applying a particular trigger without carefully considering the relevant policy language. We must not forget that the issue presented today is fundamentally a question of insurance contract interpretation.
A
Well-settled principles govern our interpretation of the cgl policies at issue. We must first determine whether the policy is clear and unambiguous on its face. We must not create an ambiguity where none exists. Further, we may not rewrite the plain and unambiguous language under the guise of interpretation. Instead, we must enforce the terms of the contract as written, interpreting the unambiguous language in its plain and easily understood sense. Upjohn, 438 Mich 206-207.
Additionally, in order to protect the policyholder from confusing policy language, ambiguous provisions must be construed in favor of the policyholder. Powers v Detroit Automobile Inter-Ins Exchange, 427 Mich 602, 623; 398 NW2d 411 (1986); American Bumper & Mfg Co v Hartford Fire Ins Co, 452 Mich 440, 448; 550 NW2d 475 (1996). Further, where the policyholder’s interpretation in favor of coverage is reasonable, that reasonable expectation must be enforced. Dow Chemical Co, supra. “Under the rule of reasonable expectation, this Court will examine whether ‘the policyholder, upon reading the contract language is led to a reasonable expectation of coverage.’ ” Vanguard Ins Co v Clarke, 438 Mich 463, 472; 475 NW2d 48 (1991), quoting Powers, supra at 632.
Turning next to the express policy language, Gelman asserts that defendants’ policies contained the following language concerning coverage:
The company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of
A. bodily injury or
B. property damage
to which this Insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the Insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company’s liability has been exhausted by payment of judgments or settlements.
Gelman asserts that the relevant policies define an “occurrence” as follows:
[A]n accident, including injurious exposure to conditions, which results during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured .... [Emphasis added.]
Arco’s policies issued by defendant American Motorists Insurance Company contain virtually identical language.
The plain language of the policies at issue unambiguously provides that an “occurrence” is an accident that results in property damage during the policy period. Otherwise stated, according to the policies’ explicit terms, actual injury must occur during the time the policy is in effect in order to be indemnifiable, i.e., the policies dictate an injury-in-fact approach. The manifestation trigger simply is not supported by the policy language. Consequently, we hold that the Court of Appeals clearly erred in adopting and applying the manifestation trigger to deny coverage.
B
We are not alone in concluding that the standard CGL policy language concerning when coverage is triggered is unambiguous. Other courts, some of which have attempted to discern how this Court would rule on the issue, have determined that the language explicitly supports an “injury in fact” approach. For example, the United States District Court for the Northern District of Ohio, in a case applying Michigan law, determined as follows:
This court also concludes that the “occurrence” clause is not ambiguous. This court believes that faced with the question, the Michigan Supreme Court would adopt the injury in fact trigger of coverage .... [Detrex Chemical Industries, Inc v Employers Ins of Wausau, 746 F Supp 1310, 1324-1325 (ND Ohio, 1990).]
In adopting the injuiy-in-fact trigger, the court in Detrex reviewed decisions from other jurisdictions that are helpful to further explain operation of the injury-in-fact trigger in cases involving continuous, gradual, or delayed property damage. The court cited with approval the following language from Triangle Publications, Inc v Liberty Mut Ins Co, 703 F Supp 367, 370 (ED Pa, 1989):
The plain meaning of the term “occurrence,” as used in the cgl policy, is clear. It is (1) an accident (2) which results (3) in property damage (4) during the policy period. Stated another way, an actual injury must occur during the time the policy is in effect in order to be indemnifiable or compensable. Any other interpretation is simply not supported by the cgl policy language.
We agree. We also agree with the following analysis, again cited with approval in Detrex, from Abex Corp v Maryland Casualty Co, 252 US App DC 297, 305; 790 F2d 119 (1986):
The plain language of the definition of “occurrence” used in the cgl policy requires exposure that “results, during the policy period, in bodily injury” in order for an insurer to be obligated to indemnify the insured. The unambiguous meaning of these words is that an injury — and not mere exposure — must result during the policy period. The CGL policies expressly distinguish exposure from injury; to equate the two as urged by Abex is to ignore this distinction. Any argument that mere exposure — without injury — triggers liability is simply unsound linguistically. Additionally, the manifesta tion theory, too, is inconsistent with the definition of “occurrence.” Although the language of these policies demands that the insured prove that an exposure caused an injury during the policy period, it imposes no requirement that the injury be discovered at that time.
Another court, also attempting to apply Michigan law, has determined that the standard CGL policy language unambiguously dictates an injury-in-fact trigger.
Although the concept expressed by these carefully selected words [in the standard cgl policy] may be difficult to apply to some claims made against the policies, the meaning of the operative language is not ambiguous.
Absolutely nothing in the policy language suggests that an event can trigger coverage prior to the time that the event results in property damage. By the same token, nothing suggests that exposure to conditions triggers coverage prior to the time that property damage results from such exposure. Moreover, the policy language does not even hint that property damage must be known to anyone in order to trigger coverage. Likewise, nothing in the policy language indicates that property damage does not exist unless someone knows about it. [Dow Chemical Co, supra at 481.]
C
Both Gelman and Arco strenuously argue that the Court of Appeals application of the manifestation trigger effectively converts their more costly “occurrence” policies into less expensive “claims made” policies because coverage would be denied unless the property damage were discovered within the policy period. We find merit in this argument. In St Paul Fire & Marine Ins Co v American Home Assurance Co, 444 Mich 560, 569, n 19; 514 NW2d 113 (1994), we noted that, under an occurrence policy, “[b]oth insured and insurer anticipate that the claim would probably not be made until after the policy period and possibly when another policy is in effect.” This Court has also noted:
Coverage in an “occurrence” policy is provided no matter when the claim is made, subject, of course, to contractual and statutory notice and limitations of actions provisions, providing the act complained of occurred during the policy period. Because the insurer’s liability in such policies ordinarily relates to a definite, easily identifiable and notorious event such as an automobile accident, . . . the insurer is ordinarily able to conduct a prompt investigation of the incident . . . with the result that actuarial considerations permit relative certainty in estimating loss ratios, establishing reserves, and fixing premium rates.
“Claims made,” or “discovery” policies, on the other hand, are of relatively recent origin and were developed primarily to deal with situations in which the error, omission, or negligent act is difficult to pinpoint and may have occurred over an extended period of time. [Stine v Continental Casualty Co, 419 Mich 89, 98-99; 349 NW2d 127 (1984).]
From the insurer’s standpoint, in retrospect, property damage resulting from gradual or latent contamination would have been better suited to a claims-made policy. This does not change the fact, however, that the policies at issue are “occurrence” policies and does not provide a basis to deny coverage by application of a judicially created manifestation theory. See Marathon Flint Oil Co v American States Ins Co, 810 F Supp 850, 852-853 (ED Mich, 1992).
D
Like other courts that have adopted the manifestation trigger, the Court of Appeals in Arco and Gelman justified the manifestation trigger because of its perception that determining the precise timing of actual property damage would be difficult, if not impossible. While we appreciate the difficulty of proof in this regard, this difficulty cannot justify redrafting unambiguous policy terms in the guise of judicial interpretation.
Instead, courts should endeavor to determine which policies are triggered from the evidence presented. Where a plaintiff can show that property damage occurred sometime within one or several of the relevant policy periods, and the plaintiff presents credible evidence (such as expert testimony) that fairly supports the plaintiff’s claims regarding when property damage occurred, courts should accept such evidence as dispositive.
Admittedly, in some cases in which the plaintiff has been able to establish that property damage occurred sometime within one or several policy periods, the plaintiff may not be able to pinpoint when the property damage actually occurred, or to apportion the amount of damage occurring during each period. In such cases, we agree with those commentators that suggest that courts should establish some means of allocating the risk among the insurers. While we do not decide the best method of allocation today because we did not grant leave on that issue and it has not been adequately briefed and argued, we note that other courts have utilized various proration methods and joint and several liability to allocate liability. See, e.g., Ins Co of North America v Forty-Eight Insulations, Inc, 633 F2d 1212, 1224-1225 (CA 6, 1980); Keene Corp v Ins Co of North America, 215 US App DC 156; 667 F2d 1034 (1981).
In advocating a rule of pro-rata allocation among all insurers sharing the risk, one commentator has noted:
In the absence of such a rale, the insured will be denied at least some of its cgl indemnification, even though it has paid yearly premiums. In a way, each of the other three triggers — manifestation, exposure, and continuous — applies an injury-in-fact analysis, but with different definitions of “injury.” The exposure theory deems the injury to have occurred when the victim or property is exposed to the damage-causing agent. The manifestation trigger deems the iiyury to have occurred when it is discovered. Thus, these other triggers all simplify the fact-finding involved by taking certain shortcuts in determining when the injury occurred. A court applying the injury-in-fact trigger eventually will reach an outcome resembling that which would be produced by one of the other three triggers (or perhaps some variation thereof). The advantage of the injury-in-fact trigger is that it produces a more accurate, less arbitrary result. . . . Thus, the position that apportionment is unacceptable because it relies on factual assumptions that are unfair to the defendant would invalidate all trigger theories except injury-in-fact. This position is not logically consistent if it rejects [proration], and yet supports the manifestation, exposure, or continuous trigger. Those triggers also make factual assumptions that can not be justified anymore [sic] than [proration].
On the other hand, it is logically defensible to argue for a strict injury-in-fact trigger, with no allowance for the insured’s inability to prove when damages or injuries occurred. Such a position, however, leads to unnecessarily harsh results. The insured would receive no cgl indemnification, even though the injury or damage occurred sometime during the policies covered by the insurers in the litigation. For these insurers to benefit from the insured’s inability to prove the exact time of a causal fact would enrich them unjustly and would upset the reasonable expectations of the insured. [Comment: Nailing Jello to a wall: A uniform approach for adjudicating insurance cov erage disputes in products liability cases with delayed manifestation injuries and damages, 83 Cal L R 1243, 1290-1291 (1995).]
We agree with this reasoning insofar as courts
should not employ a strict standard of proof regarding injury in fact and should instead endeavor to fairly allocate the risk.
E
In addition to relying on the convenience provided by the manifestation approach, the Court of Appeals in both Gelman and Arco also relied on two cases, Transamerica and Mraz, supra. We find, however, that neither decision justifies the Court of Appeals departure from the policies’ plain language.
As explained earlier, Transamerica involved bodily injury and property damage claims arising from exposure to gases emitted by urea-formaldehyde foam insulation (ufei). Gas emissions were continuous from installation until removal, but were highest immediately after installation. The trial court found that the bodily injury and property damage alleged by the underlying plaintiffs occurred contemporaneously with installation. The Court of Appeals rejected the insured’s argument that exposure alone triggers coverage. Instead, the Court held that the policy language dictated that “it is bodily injury or property damage . . . that triggers coverage.” We find that the Court’s statement of the proper trigger up to this point in its opinion is correct. The Court, however, went on to state that
this does not fully answer the question presented, which is: When does bodily injury or property damage occur where exposure to gases from uffi is claimed? While there is little dispute that the effects of uffi gases continue until the insulation is removed from the home and that the underlying plaintiffs alleged continuing injuries or damages, we find that bodily injury, for purposes of triggering coverage, occurs when the symptoms begin or manifest themselves to the homeowner. If this is at the time of installation, then plaintiff would be solely responsible for its insured’s defense costs and damages .... [Transamerica at 59.]
We find that the Court in Transamerica, while starting down the right track in its analysis, went astray in labeling manifestation as the trigger. To the extent that the language in Transamerica advocates a manifestation trigger, it is erroneous and should not be followed.
We further find that the other case relied on by the Court, Mraz, supra, is not persuasive authority and should not have been followed. The Court relied on Mraz for its conclusion that a manifestation trigger is appropriate because of the difficulty in determining exactly when damage begins. As we have already stated, a theory adopted for its convenience, which goes directly against the plain policy language, must be rejected. Further, as we have also already explained, other means may be utilized by courts to deal with the difficulties in proof that often exist in these types of cases.
Additionally, we note that Mraz, which was a federal district court decision inteipreting Maryland law, has not been followed by Maryland courts. In Harford Co v Harford Mut Ins Co, 327 Md 418; 610 A2d 286 (1992), Maryland’s highest court rejected the manifestation approach in favor of an iujury-in-fact trigger. While agreeing with the United States Court of Appeals for the Fourth Circuit in Mraz that difficulty in proof is a problem in these types of cases, the court in Harford did not regard that difficulty to be justification for abandoning the plain language of the policies and noted that the factual determination was “quite likely a matter for expert testimony.” Id. at 436. We agree and find that the Court of Appeals erred in its reliance on Mraz.
IV
APPLICATION OF AN INJURY-IN-FACT APPROACH
In Gelman, coverage under its alleged policies is triggered when the alleged property damage, here groundwater contamination from Gelman’s disposal of 1,4-dioxane, first occurred. Coverage would also exist under any subsequent policy periods during which contamination continued to occur. Because proceedings in the trial court had not been concluded before the trigger issue was appealed, we remand the case to the trial court for further proceedings consistent with this opinion. Particularly, the trial court must determine whether the policies in fact existed and when the contamination occurred.
In Arco, the trial court found that there had been coverage triggering occurrences in each of defendant’s policy periods. Specifically, the court found as follows:
It was clear that there were accidents occurring throughout the period of the policies at issue. There were accidental spills, according to the testimony, which resulted in discharges into the drains in the plant, as well as unintentional overflows into the drains in the plant. The evidence supports finding that the vocs which were released, entered the soil in all three areas described on the exhibits, that they entered the aquifer and contributed to the plume.
These findings were based on testimony from plaintiff’s employees regarding numerous and repeated accidental spills and overflows of materials containing vocs. Additionally, Arco established, by expert testimony, that not only were there releases of contaminants in each policy period, but also that there was actual property damage resulting from these releases in each of the policy periods as well. Joel Hunt, an expert on hydrogeology and contaminant transport, testified that the releases to the soil would have reached the groundwater beneath the site in eight weeks or less and would have contributed to the soil and groundwater contamination. The trial court found Mr. Hunt’s testimony to be credible. We affirm the trial court’s conclusion that the evidence supported finding that the vocs were released and contributed to the contamination in each of the policy periods.
v
CONCLUSION
The standard cgl policy language, providing coverage for property damage occurring during the policy period, unambiguously dictates application of an injury-in-fact trigger of coverage. The Court of Appeals clearly erred in applying a manifestation trigger to hold that there was no coverage under the policies because the environmental contamination was not discovered during the policy periods. Consequently, we reverse the Court of Appeals decisions in both Gelman and Arco. In Gelman, we remand to the trial court for proceedings consistent with this opinion. In Arco, we affirm the trial court’s findings that there had been coverage triggering occurrences in each of the defendant’s policy periods.
Brickley, Cavanagh, Boyle, Weaver, Kelly, and Taylor, JJ., concurred with Mallett, C.J.
454 Mich 873 (1997).
454 Mich 874 (1997).
Comments, Insurance coverage for environmental cleanup: Are you in good hands? 10 Computer & High Tech L J 373, 377 (1994).
Id., n 3 at 377-378.
Id., n 3 at 379. See also comment, Allocating progressive injury liability among successive insurance policies, 64 U Chi L R 257, 260 (1997).
10 Computer & High Tech L J 373, 379. The language in the Arco and Gelman policies is essentially identical, see part m(A) for the relevant language.
It is important to note that the term “trigger of coverage” is not a legal doctrine to be automatically applied by a court to conclusively determine coverage in a given case. Neither is it a term found in cgl policies. Rather, as noted by the Supreme Court of California, it is a term of art used by insureds and insurers alike to
denote the circumstances that activate the insurer’s defense and indemnity obligations under the policy. . . . “[T]rigger of coverage” is a term of convenience used to describe that which, under the specific terms of an insurance policy, must happen in the policy period in order for the potential of coverage to arise. The issue is largely one of timing — what must take place within the policy’s effective dates for the potential of coverage to be “triggered”? Whether coverage is ultimately established in any given case may depend on the consideration of many additional factors, including the existence of express conditions or exclusions in the particular contract of insurance under scrutiny, the availability of certain defenses that might defeat coverage, and a determination of whether the facts of the case will support a finding of coverage. [Montrose Chemical Corp of California v Admiral Ins Co, 10 Cal 4th 645, 655, n 2; 913 P2d 878 (1995).]
Some commentators have noted that the injury-in-fact approach often looks identical to the continuous trigger theory. 64 U Chi L R 257, 262. This is likely because the concept of “injury in fact” is flexible. The factfinder can determine that injury occurred at any number of points, from initial exposure through manifestation. Further, in continuous damages cases, injury may occur repeatedly through numerous consecutive policy periods.
9 Gelman asserts that before October, 1966, its policies insured against an “accident,” rather than an “occurrence,” but that, otherwise, the insuring agreements were substantially identical. Gelman contends that Michigan courts have generally interpreted the coverage of accident-based policies consistent with that of occurrence policies. Guerdon Industries, Inc v Fidelity & Casualty Co of New York, 371 Mich 12, 18-19; 123 NW2d 143 (1963). We agree that analysis of the trigger issue, which hinges on the timing of the property damage, should be identical whether that property damage is denoted as an “accident” or as an “occurrence” under the specific policy at issue. See also Ins Co of North America v Forty-Eight Insulations, Inc, 633 F2d 1212, 1216, n 7 (CA 6, 1980).
The only notable difference is in the later policies, issued for the years 1973 through 1975. While in these policies the definition of “occurrence” lacks the phrase “during the policy period,” that phrase is included instead in the definitions of bodily injury and property damage.
We further note that even if we were to find ambiguity in the cgl coverage provisions, we would also reject the manifestation theory under the rule requiring that ambiguities be construed in favor of coverage. Powers and American Bumper, supra.
We note that in other circumstances, this Court has also been willing to employ rules designed to assist a plaintiff in the face of an insurmountable burden of proof. While not precisely analogous to the situation presented here, in Abel v Eli Lilly & Co, 418 Mich 311; 343 NW2d 164 (1984), this Court employed the “theory of alternative liability” to allow the plaintiffs, whose mothers had ingested the drug des during pregnancy, to go forward with their suit against manufacturers of the drug. The plaintiffs faced the insurmountable task of proving which of several manufacturers had supplied the drug in their particular case, years after the drug had been ingested. This Court held that under the “theory of alternative liability,” the burden of proof on the element of causation in fact, i.e., proof of which manufacturer supplied the drug, shifted to the defendants once the innocent plaintiff demonstrated that all defendants acted tortiously, but only one unidentifiable defendant caused the plaintiffs injury. We recognize that the equities underlying the theory adopted in Abel are not identical to those presented here and do not necessarily suggest that Abel’s burden-shifting approach should apply in this context. However, Abel is instructive in demonstrating how courts can employ fair rules to alleviate an impossible burden when justice requires.
We note that the record before us appears to indicate that Gelman seeks indemnification and defense costs primarily related to allegations of groundwater contamination in the underlying suits. To the extent that the state and private parties also may have alleged other types of property damage, such as soil and surface water contamination, the policies would, of course, be triggered when those injuries to the environment first occurred.
In this regard, the trial court noted:
Mr. Hunt was the expert proffered by the plaintiff, and I found him to be much more knowledgeable and much more conversant and familiar with this situation than Mr. Smith, the expert offered by the defense. His credentials were credible, he studied in the area of hydrogeology, he had considerable experience in this area At one point he taught classes in soil composition which was an important factor because the composition of the soil under the plant was an important area of dispute between Mr. Smith and Mr. Hunt. | [
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Taylor, J.
Plaintiffs, former operators and employees of massage parlor establishments in the city of Ferndale, brought suit challenging the constitutionality of Ferndale Ordinance No. 832, as amended by Ordinance No. 836. The ordinance is a comprehensive scheme of regulations governing the operation of massage parlors within the city of Ferndale. In a published opinion on remand, the Court of Appeals affirmed the circuit court’s finding that two sections of the city’s ordinance were violative of the state and federal constitutions. The panel determined that § 7-266(a) of the ordinance, which prohibits opposite sex massage in massage parlor establishments except on a written order from a licensed health care practitioner, impermissibly discriminates on the basis of gender in violation of the state and federal Equal Protection Clauses. It further held that § 7-265, which provides for periodic inspections without warrants of massage parlors by the police or other authorized city inspectors, violates constitutional protections against searches and seizures. We granted leave to appeal and now reverse because we find that the ordinance is constitutionally valid in its entirety.
I
In November 1990, the city of Femdale enacted a comprehensive ordinance regulating massage parlors. Among other things, Ordinance No. 832, as amended by Ordinance No. 836, sets forth procedures and educational requirements for obtaining a city license or permit to own, operate, or work in a massage parlor, and prescribes necessary facilities, hours of operation, and employee conduct and dress. The ordinance also restricts opposite sex massages in § 7-266(a). That section provides:
Treatment of persons of opposite sex restricted. It shall be unlawful for any person holding a permit under this section and working in a massage establishment to treat a person of the opposite sex, except upon the signed order of a licensed physician, osteopath, chiropractor, or registered physical therapist, which order shall be dated and shall specifically state the number of treatments, not to exceed ten (10). The date and hour of each treatment given and the name of the operator shall be entered on such order by the establishment where such treatments are given and shall be subject to inspection by the police pursuant to this article. The requirements of this subsection shall not apply to treatments given in the residence of a patient, the office of a licensed physician, osteopath or registered physical therapist, chiropractor, or in a regularly established and licensed hospital or sanitarium.
Further, the ordinance provides for periodic inspections of massage parlor establishments at § 7-265, which states:
The chief of police or other authorized inspectors from the City of Ferndale shall from time to time make inspection of each massage business establishment for the purposes of determining that the provisions of this article are fully complied with. It shall be unlawful for any licensee to fail to allow such inspection officer access to the premises or hinder such officer in any manner.
Under § 2-270, violation of any provision of the ordinance is a misdemeanor punishable by a fine of up to $500 or ninety days in jail.
Plaintiffs filed suit in Oakland Circuit Court, challenging the constitutionality of the ordinance. Initially, the circuit court found that several sections of the ordinance were violative of the state and federal constitutions. In reviewing this decision, however, the Court of Appeals held that the entire ordinance was preempted by provisions of the Occupational Code regulating myomassologists and did not address plaintiffs’ constitutional claims. In lieu of granting leave to appeal, this Court issued an order vacating that decision and remanding the case for reconsideration in light of 1995 PA 104, which repealed those portions of the Occupational Code that formed the basis of the panel’s finding of preemption. In addition, we directed the Court of Appeals to consider the constitutional issues that were left unaddressed.
On June 21, 1996, the Court of Appeals issued a second opinion on remand, holding that the two pro visions at issue are unconstitutional. 217 Mich App 295; 551 NW2d 454 (1996). The panel concluded that § 7-266(a) violated the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution, as well as the equal protection guarantees provided by Michigan’s Constitution. Const 1963, art 1, § 2. The opinion observed that classification schemes based on gender require application of the heightened scrutiny test, which requires that the classification serve an important governmental purpose and that it must be substantially related to achieving the government’s objective. 217 Mich App 303. In applying this test to the ordinance at issue, it stated:
Section 7-266(a) of defendant’s ordinance is directed at an important public purpose, mainly the prevention of prostitution at massage parlors. Defendant’s brief does not explain how the means of prohibiting mixed-gender massage is substantially related toward this end. Although prohibiting massage performed upon persons of the opposite gender would certainly prevent any sort of heterosexual contact between female masseuses and male customers, it would also cut the available number of plaintiff’s [sic] prospective customers in half, significantly affecting their business. Although defendant’s goal is legitimate, the prohibition applied to accomplish that goal is far too broad to be considered substantially related under the heightened-scrutiny test. [Id. at 303-304.]
With regard to the section of the ordinance dealing with inspections, § 7-265, the Court of Appeals affirmed the circuit court’s determination that the provision violated the Fourth Amendment’s constitutional protections against conducting searches and seizures without warrants. Id. at 304. It reached this conclusion on the basis of the reasoning that the administrative search exception to the warrant requirement is inapplicable because the state of Michigan does not pervasively regulate the massage parlor industry. Id. at 305. However, the panel reversed the circuit court’s finding of constitutional violations with regard to other provisions of the ordinance relating to educational requirements, minimum age restrictions, and prohibitions regarding touching or exposure of body parts.
II
Before beginning our analysis, we note that an individual’s right to engage in business is subject to the state’s authority, pursuant to its historic police powers, to enact laws protecting the public health, safety, welfare, and morals. Grocers Dairy Co v Dep’t of Agriculture Director, 377 Mich 71, 75; 138 NW2d 767 (1966). “The enactment and enforcement of ordinances related to municipal concerns is a valid exercise of municipal police powers as long as the ordinance does not conflict with the constitution or general laws.” Rental Property Owners Ass’n of Kent Co v Grand Rapids, 455 Mich 246, 253; 566 NW2d 514 (1997). The rules governing the construction of statutes apply with equal force to the interpretation of municipal ordinances. Macenas v Village of Michiana, 433 Mich 380, 396; 446 NW2d 102 (1989). Statutes and ordinances must be construed in a constitutional manner if possible. Detroit v Qualls, 434 Mich 340, 364; 454 NW2d 374 (1990). Because ordinances are presumed constitutional, the party challenging the validity of an ordinance has the burden of proving a violation. Rental Property Owners Ass’n, supra at 253.
III
The city argues that the Court of Appeals erred when it concluded that § 7-266(a), prohibiting opposite sex massages, was unconstitutional as a violation of the Fourteenth Amendment. We agree. The Court of Appeals decision is contrary to numerous United States Supreme Court decisions allowing such ordinances to stand on the basis of its conclusion that no federal question implicating equal protection guarantees was raised by the measures. Further, the ordinance does not run afoul of our state constitution. In Doe v Dep’t of Social Services, 439 Mich 650, 672; 487 NW2d 166 (1992), we stated:
[W]e do not find in the wording used, nor in its arrangement, any evidence of purpose on the part of the drafters to provide broader protection in the Equal Protection Clause of the state constitution than is found in its federal counterpart. Rather, the pattern suggests a deliberate effort to duplicate the protection secured by the federal clause.
The United States Supreme Court has repeatedly ruled that ordinances prohibiting opposite sex massage do not present a substantial federal question.
In the first of these cases, Kisley v City of Falls Church, 212 Va 693; 187 SE2d 168 (1972), the Virginia Supreme Court held that an ordinance restricting opposite sex massages did not violate constitutional due process or equal protection guarantees. Id. at 696. The court concluded that, because the ordinance applied equally to both men and women, “[t]here is nothing in the ordinance that denies the equal protection guaranteed by the Fourteenth Amendment. . . .” Id. On appeal, the United States Supreme Court dismissed the matter for want of a substantial federal question. Kisley v City of Falls Church, 409 US 907; 93 S Ct 237; 34 L Ed 2d 169 (1972). The meaning of such a dismissal is that all the issues properly presented to the Supreme Court have been considered on the merits and held to be “without substance”; for this reason, the adjudication is binding precedent under the doctrine of stare decisis with respect to those issues when raised in subsequent matters. In re Apportionment of State Legislature— 1992, 439 Mich 715, 729; 486 NW2d 639 (1992), citing Hicks v Miranda, 422 US 332; 95 S Ct 2281; 45 L Ed 2d 223 (1975).
Not surprisingly, in subsequent cases before the Supreme Court raising the identical issue, the Court has consistently rejected constitutional challenges. See, e.g., Wright v Indianapolis, 439 US 804; 99 S Ct 60; 58 L Ed 2d 97 (1978), where, again, the Court dismissed for want of a substantial federal question Indianapolis v Wright, 267 Ind 471; 371 NE2d 1298 (1978). The Court did the same in Smith v Keator, 419 US 1043; 95 S Ct 613; 42 L Ed 2d 636 (1974), and in Rubenstein v Cherry Hill Twp, 417 US 963; 94 S Ct 3165; 41 L Ed 2d 1136 (1974). The federal circuit and district courts have followed this authority, as have the state courts that have considered it. It can be said, then, that this issue has been conclusively decided with regard to the federal constitution, and this Court, in light of this authority and the merits of the arguments presented, also concludes that this ordinance restricting or prohibiting opposite sex massages does not violate federal equal protection guarantees. People v Walker (On Rehearing), 374 Mich 331, 336; 132 NW2d 87 (1965).
Further, as noted above, the scope of the equal protection guarantee afforded by our state constitution is coextensive with its federal counterpart. Doe, supra at 672. Therefore, the United States Supreme Court dismissals cited above compel our conclusion that the ordinance is not violative of plaintiffs’ rights to equal protection of the law under art 1, § 2 of Michigan’s Constitution.
rv
Having decided that plaintiffs’ equal protection claims are unavailing, we now move on to consider the plaintiffs’ constitutional challenge to the inspection provision of the ordinance as violative of the Fourth Amendment’s protection against searches conducted without warrants. The Court of Appeals determined that the administrative search exception to the warrant requirement is inapplicable under these circumstances because the massage parlor industry is not subject to pervasive regulation. We disagree.
While it is well established that the Fourth Amendment’s prohibition of unreasonable searches and seizures applies to administrative inspections of private commercial property, an exemption from the search warrant requirement exists for administrative inspections of closely regulated industries. Donovan v Dewey, 452 US 594, 602-603; 101 S Ct 2534; 69 L Ed 2d 262 (1981); United States v Biswell, 406 US 311; 92 S Ct 1593; 32 L Ed 2d 87 (1972); Colonnade Catering Corp v United States, 397 US 72; 90 S Ct 774; 25 L Ed 2d 60 (1970). Whether the exemption applies is primarily determined by “ ‘the pervasiveness and regular ity of the . . . regulation’ and the effect of such regulation upon an owner’s expectation of privacy.” New York v Burger, 482 US 691, 701; 107 S Ct 2636; 96 L Ed 2d 601 (1987). When a person chooses to engage in a “pervasively regulated business ... he does so with the knowledge that his business . . . will be subject to effective inspection.” Biswell, supra at 316. In part, the justification for this is that, unlike under general inspection schemes, the person in the pervasively regulated business “is not left to wonder about the purposes of the inspector or the limits of his task” as long as the regulations provide notice of and implicitly restrict the scope of the inspection to those areas of the business that must be examined to enforce the regulations. Id.; see also Donovan, supra at 603-604.
While regulation of massage parlors has not been as extensive as that of some other enterprises, such as the liquor or firearms industries, it has nonetheless been held to be a pervasively regulated industry. Pollard v Cockrell, 578 F2d 1002, 1014 (CA 5, 1978); Kim v Dolch, 173 Cal App 3d 736, 743; 219 Cal Rptr 248 (1985); see also anno: Regulation of masseurs, 17 ALR2d 1183. In Indianapolis v Wright, supra at 478, the Indiana Supreme Court upheld a local massage parlor inspection ordinance similar to the one at issue in this case against a Fourth Amendment challenge. After discussing federal case law relating to administrative inspections conducted pursuant to a licensing program, the court concluded that this was a pervasively regulated enteiprise and that the massage parlor inspection scheme authorized by the ordinance was reasonable and permissible under the administrative search exception to the warrant requirement. Id. When appealed, the United States Supreme Court dismissed the appeal sub nom, Wright v Indianapolis, supra, for want of a substantial federal question. As noted in the preceding section, the Supreme Court’s disposition of a case in this manner is a decision on the merits that is stare decisis with regard to the issues presented, including, of course, the question of pervasive regulation. In re Apportionment of State Legislature — 1992, supra at 729; Hicks, supra at 344-345. Thus, we conclude that the United States Supreme Court has determined that the massage parlor industry is a pervasively regulated business and that inspections of massage parlors conducted without warrants pursuant to a comprehensive licensing and regulation ordinance are permissible under the administrative search exception to the warrant requirement of the Fourth Amendment.
It is important to note that, while the Court of Appeals resolution of this issue turned solely on whether massage parlors are a pervasively regulated industry, the trial court found the inspection provision of the Femdale ordinance constitutionally objectionable because, unlike the ordinance upheld in Wright, the Femdale ordinance provides for criminal prosecution for refusing to permit inspections. Furthermore, the trial court held the ordinance to be constitutionally defective because it fails to expressly limit inspections to business hours or other reasonable times and does not expressly require that inspections be conducted in a reasonable manner. We shall address these distinctions in turn.
As a prelude to our discussion of the trial court’s first ground for finding the ordinance constitutionally objectionable, namely, that it imposes criminal penalties, we note that the penalties imposed are not equivalent to a criminal prosecution under Michigan law. As we recently stated in Huron Twp v City Disposal Systems, Inc, 448 Mich 362, 365; 531 NW2d 153 (1995), “[t]his Court has long recognized that prosecutions for violations of ordinances are in a sense criminal, but that such violations are not criminal cases within the meaning of the statutes and rules for review by this Court.”
However, even if the penalties imposed are considered criminal in nature, the United States Supreme Court has repeatedly held that an administrative regulatory scheme is not rendered constitutionally unreasonable because it imposes criminal penalties for refusing to allow an administrative inspection without a warrant or for any other violation of the underlying law. Burger, supra at 712; Biswell, supra at 315; see also Kim, supra at 747. A business owner or employee’s “decision to step aside and permit the inspection rather than face a criminal prosecution is analogous to a householder’s acquiescence in a search pursuant to a warrant when the alternative is a possible criminal prosecution for refusing entry . . . .” Biswell, supra at 315. In Burger, supra at 712, the Supreme Court expressly recognized that social problems may be addressed “both by way of an administrative scheme and through penal sanctions.” Plaintiffs have cited no case holding that the imposition of criminal penalties, by itself, is sufficient to invalidate an otherwise constitutional ordinance providing for administrative inspections of commercial property conducted pursuant to a comprehensive licensing program. Thus, the ordinance cannot be adjudged unconstitutional solely on the basis that criminal penalties are provided for its violation.
We now turn to the second constitutional infirmity identified by the trial court, the absence of an express reasonableness requirement. While it is true that ordinance § 7-265 does not state that inspections must be conducted in a reasonable manner or at a reasonable time, the trial court erred in its assumption that the city council intended to authorize unreasonable inspections. It is one of the oldest and most well-established tenets of our jurisprudence that legislative enactments enjoy a presumption of constitutionality. As this Court stated in Brown v Shelby Twp, 360 Mich 299, 309; 103 NW2d 612 (1960):
“The generally accepted rale is that a presumption prevails in favor of the reasonableness and validity in all particulars of a municipal ordinance unless the contrary is shown by competent evidence, or appears on the face of the enactment.” [Quoting Harrigan & Reid Co v Burton, 224 Mich 564, 569; 195 NW 60 (1923).]
One of the reasons underlying this presumption is that persons holding legislative office, such as members of the city council, are duty-bound to act in conformity with their oaths to support the Michigan and federal constitutions, just as are members of the judiciary. Marbury v Madison, 5 US (1 Cranch) 137, 179-180 (1803). As Justice Holmes put it, “it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.” Missouri, Kansas & Texas R Co v May, 194 US 267, 270; 24 S Ct 638; 48 L Ed 971 (1904). Therefore, it cannot be assumed that the city council members intended to violate their civic trust; such an assumption impermissibly shifts the burden of proof to the municipality. Rental Property Owners Ass’n, supra at 253. Moreover, the oath to uphold the constitution would be rendered meaningless if legislators were required at every turn to prove that they acted in conformance with it.
In addition to disregarding the presumption of constitutionality, reading § 7-265 to authorize unreasonable inspections is also inconsistent with the understanding that the words of the ordinance should trigger. The ordinance says that inspections may only be conducted “for the purposes of determining that the provisions of this article are fully complied with.” This means, as interpreted in Michigan, that they are to be done reasonably. In Tallman v Dep’t of Natural Resources, 421 Mich 585, 626-627; 365 NW2d 724 (1984), we found that the inspection statute at issue, which authorized inspections of fishing vessels “at any time,” did not offend either the state or federal constitution because it was sufficiently limited by language stating that the inspections “must be deemed ‘necessary’ to carry out the provisions of the act.” These limitations on the acceptable scope of an inspection assure the requirement that the action be reasonable. The same result obtains here, and we find that the inspection ordinance is, in like fashion, implicitly limited by its language restricting the scope of inspections to that necessary to determine compliance with the other provisions of the ordinance.
A further reason this ordinance should be read as only permitting reasonable inspections is that an unreasonable inspection could not, as a matter of law, be one to which the licensee could be held to have consented. It is well established that administrative searches conducted without warrants are permissible in closely regulated industries because a licensee in such an industry is held to have impliedly consented to periodic inspections by applying for and obtaining a license. Almeida-Sanchez v United States, 413 US 266, 271; 93 S Ct 2535; 37 L Ed 2d 596 (1973); Biswell, supra at 316; Wright, supra at 478. However, the scope of the consent given extends only to reasonable inspections that are limited to that necessary to ensure compliance with the regulatory scheme. In Tallman, supra at 629, we stated unequivocally that no one “can be required to surrender . . . constitutionally protected rights in exchange for the privilege of doing business.” Thus, because we must assume that the city council acted reasonably and constitutionally, with awareness of the existing law, it can only be concluded on this basis also that only reasonable inspections are authorized by § 7-265.
Finally, plaintiffs’ claim that the ordinance is facially invalid as violative of the Fourth and Fourteenth Amendments of the federal constitution and art 1, §§ 11 and 17 of the Michigan Constitution is meritless. A legislative enactment can be held to be facially invalid only if there are no factual circumstances under which the provision could be constitutionally implemented. United States v Salerno, 481 US 739, 745; 107 S Ct 2095; 95 L Ed 2d 697 (1987). The trial court misunderstood this test by finding that, if circumstances could be conceived under which the ordinance would be unconstitutionally applied, then the ordinance must fall. This turns the test on its head. “The cardinal principle of statutory construction is to save and not to destroy.” NLRB v Jones & Laughlin Steel Corp, 301 US 1, 30; 57 S Ct 615; 81 L Ed 893 (1937). Because there are circumstances under which the ordinance would be valid, namely, inspections conducted in a reasonable manner consistent with plaintiffs’ Fourth Amendment rights, the test is met and the facial challenge to constitutionality fails.
Therefore, because § 7-265 may be construed, consistent with constitutional protections, to permit periodic reasonable inspections for the purpose of determining compliance with the ordinance, we reverse the Court of Appeals decision finding the provision violative of the Fourth Amendment of the United States Constitution.
v
In conclusion, we hold that the Ferndale massage parlor ordinance is constitutional in its entirety. As we have explained, the United States Supreme Court has repeatedly held that provisions restricting or prohibiting opposite sex massages do not offend the Equal Protection Clause of the federal constitution. Further, under these circumstances, the Michigan Constitution provides no greater protection than does its federal counterpart. Thus, the Court of Appeals erred in finding that the ordinance violated plaintiffs’ equal protection rights.
We find that the administrative search exception to the warrant requirement is applicable in this case because the United States Supreme Court implicitly held that the massage parlor industry is subject to pervasive regulation in its dismissal of the appeal in Wright, supra, for want of a substantial federal question. The slight differences between the language of Ferndale Ordinance § 7-265 and similar inspection provisions upheld by the Supreme Court do not warrant finding a constitutional violation. Because we must construe the ordinance in a constitutional manner if possible, we read the ordinance as permitting periodic inspections that are conducted without warrants in a reasonable fashion solely for the purposes of determining compliance with the requirements of the ordinance. Consequently, the Court of Appeals decision is reversed.
Mallett, C.J., and Brickley, Boyle, and Weaver, JJ., concurred with Taylor, J.
217 Mich App 295; 551 NW2d 454 (1996).
US Const, Am XIV, § 1; Const 1963, art 1, § 2.
US Const, Am IV, made applicable to the states through the Due Process Clause of the Fourteenth Amendment. Mapp v Ohio, 367 US 643; 81 S Ct 1684; 6 L Ed 2d 1081 (1961). See also Const 1963, art 1, §§ 11, 17.
456 Mich 851 (1997).
210 Mich App 622; 533 NW2d 840 (1995).
451 Mich 875 (1996).
Plaintiffs have not appealed from this portion of the Court of Appeals decision.
Accord Song v Elyria, Ohio, 985 F2d 840, 843 (CA 6, 1993), Oriental Health Spa v Fort Wayne, 864 F2d 486, 490 (CA 7, 1988), Mini Spas v South Salt Lake City, 810 F2d 939 (CA 10, 1987), Pollard v Cockrell, 578 F2d 1002, 1010-1011 (CA 5, 1978), Tomlinson v Savannah, 543 F2d 570, 571 (CA 5, 1976), Colorado Springs Amusements, Ltd v Rizzo, 524 F2d 571, 576 (CA 3, 1975), cert den 428 US 913 (1976), Clampitt v Fort Wayne, 682 F Supp 401 (ND Ind, 1988), Wigginess, Inc v Fruchtman, 482 F Supp 681, 687-689 (SD NY, 1979), aff'd 628 F2d 1346 (CA 2, 1980), cert den 449 US 842 (1980), Techtow v City Council of North Las Vegas, 105 Nev 330, 333-334; 775 P2d 227 (1989), and Redwood Gym v Salt Lake Co Comm, 624 P2d 1138, 1146 (Utah, 1981) (“It has been established to a certainty . . . that an ordinance such as the one in question here does no violence to federal guarantees of equal protection”). We find the reasoning in the sole case cited by plaintiffs, JSK Enterprises, Inc v City of Lacey, 6 Wash App 43, 54-55; 492 P2d 600 (1971), to be unpersuasive because the case was decided before the United States Supreme Court decision in Kisley.
There exists no legal basis for the Court of Appeals finding that the restrictions on opposite sex massage are “far too broad to be considered substantially related” to the government’s interest in controlling prostitution. The United States Supreme Court has never “recognized an ‘over-breadth’ doctrine outside the limited context of the First Amendment.” United States v Salerno, 481 US 739, 745; 107 S Ct 2095; 95 L Ed 2d 697 (1987).
As the dissent notes, this Court adopted the “pervasively regulated industry” exception to the warrant requirement of art 1, § 11 in Tallman v Dep’t of Natural Resources, 421 Mich 585; 365 NW2d 724 (1984). In Tollman, this Court noted that the seven factors in the test it announced “differ only slightly from the five factors applied in the federal courts.” Id. at 618. To be understood is that these two tests are essentially identical, although organized differently, i.e., there are seven factors in the Michigan version and five factors in the federal version. Thus, Michigan has adopted a “pervasively regulated industry” exception to art 1, § ll’s warrant requirement that is essentially the same as the federal exception. Further, this Court has stated that “the Michigan Constitution should not be construed to provide greater remedy for search and seizure violations than the federal constitution unless there is a compelling reason to do so.” People v Champion, 452 Mich 92, 97-98, n 3; 549 NW2d 849 (1996). Neither the parties nor the dissent offer any compelling reason why the Michigan Constitution should be construed differently than the federal constitution regarding the “pervasively regulated industry” exception to the warrant requirement. Accordingly, the United States Supreme Court authority, discussed below, regarding the precise issue before us — a local massage parlor inspection ordinance — conclusively resolves the issue here.
We are unpersuaded by plaintiffs’ contention that there can be no finding that the massage parlor trade is a pervasively regulated industry in the absence of a history of regulation by the city of Ferndale. The United States Supreme Court expressly rejected an approach that relied exclusively on historical factors in Donovan v Dewey, supra at 606, stating that “if the length of regulation were the only criterion, absurd results would occur.” Rather, “it is the pervasiveness and regularity of the . . . regulation that ultimately determines whether a warrant is necessary to render an inspection program reasonable under the Fourth Amendment.” Id.; see also New York v Burger, supra at 701; Tallman v Dep’t of Natural Resources, n 10, supra at 607. Moreover, the goal of the ordinance is primarily to prevent massage establishments from being used as a front for prostitution, which, as “the oldest profession,” historically has been subject to pervasive regulation for perhaps longer than any other industry.
The ordinance in that case provided that massage parlors and similar businesses “shall be open for inspection during all business hours and at other reasonable times by police officers, health and fire inspectors . . . upon the showing of proper credentials by such person.” Id.
In addition to conclusively resolving the question whether the massage parlor business is a “pervasively regulated industry,” the Supreme Court’s disposition of Wright also illustrates the error in the Court of Appeals assumption that the industry must be regulated at the state level. Just as in the instant case, in Indianapolis v Wright, supra at 475, there was no state statute regulating massage parlors.
The United States Supreme Court has repeatedly upheld inspection provisions conferring substantial discretion on inspectors in situations where, as in the instant case, “unannounced, even frequent, inspections are essential” to effective enforcement of a comprehensive and well-defined regulatory scheme. Biswell, supra at 316; see also Donovan, supra at 603; Burger, supra at 710-711.
Similarly, in People v McQuillan, 392 Mich 511, 536-537; 221 NW2d 569 (1974), we held that it is the court’s duty to construe a statute “as constitutional unless the contrary clearly appears.” In that case, a due process challenge was raised to a statute requiring that the defendants found not guilty by reason of insanity “be committed immediately.” Id. This Court determined that the statute did not, on its face, violate due process because a hearing requirement could be inferred from the provision. Id.
Moreover, plaintiffs cannot assert that the inspection provision of the ordinance is unconstitutional as applied. There is no evidence whatsoever in the record from which to conclude that the ordinance has been applied in an unconstitutional manner. | [
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Kelly, J.
We granted leave to determine whether the city of Riverview can be held hable under the proprietary function exception to governmental immunity for injuries that occurred at its landfill. We conclude that operation of the landfill is a proprietary function and that the city is subject to Lability.
i
In 1967, city of Riverview voters approved a bond proposal to purchase real property for a landfill. Construction started in the summer of 1968, and by 1969, the landfill was operating. By 1990, it served seventeen municipal customers in the southern Wayne County area. It also accepted commercial waste from numerous sources including the county of Wayne and the province of Ontario, Canada. It bore a type n designation, meaning it accepted general household and nonhazardous waste.
When a hauler delivered waste to the landfill, it stopped at a gatehouse. Its volume of waste was measured and a fee charged. The gate attendant then directed the driver to the active fill area with instructions about where to dump the waste.
On January 17, 1990, Jimmie Coleman drove his garbage truck into the city of Riverview landfill to unload garbage. A second track, owned by Albright Construction Company, and driven by Francis Kootsillas, was already at the site. Kootsillas was standing near his track when Coleman backed his vehicle parallel to Kootsillas’ track.
Coleman noticed that two of the tires on Kootsillas’ track were flat. He warned Kootsillas of the problem and the latter acknowledged by nodding his head.
Soon after, as Kootsillas operated the lift on his track to unload garbage, the track overturned and fell on Coleman’s track. Coleman was pinned inside, suffering a leg injury.
Coleman and his wife filed suit against the Albright Construction Company, Kootsillas, and the city of Riverview. They asserted that the city was liable because it allowed the road and surrounding areas to become muddy and unmanageable. The conditions allegedly had contributed to the track’s overturning. Purportedly, the city had failed to remedy the hazard or warn drivers of the increased danger of dumping garbage under muddy conditions.
The Colemans agreed to a voluntary dismissal of the city, in the belief that no exception to governmental immunity applied to it. Kootsillas then filed a third-party complaint against the city, raising the same allegations as had the Colemans in their complaint. The Colemans eventually settled with Kootsillas for $350,000 and assigned their rights against the city to Kootsillas.
The city filed a motion for summary disposition pursuant to MCR 2.116(C)(7), arguing that it was immune from tort liability. The trial court granted the motion, finding that the operation of the city’s landfill was not a proprietary function.
The Court of Appeals reversed. 214 Mich App 570; 543 NW2d 356 (1995). It held that the landfill was a proprietary activity, in that it was conducted to produce a pecuniary profit, and its operation was not normally supported by taxes and fees. We granted the city’s application for leave to appeal. 454 Mich 906 (1997).
II
Trial courts’ orders granting summary disposition are reviewed de novo on appeal. In this case, the trial court rendered summary disposition pursuant to MCR 2.116(C)(7), on the basis of governmental immunity.
When deciding a motion under MCR 2.116(C)(7), courts must consider the pleadings as well as any affidavits and documentary evidence submitted by the parties. MCR 2.116(C)(5); Patterson v Kleiman, 447 Mich 429; 526 NW2d 879 (1994).
m
Michigan’s governmental immunity statute provides that “all governmental agencies shall be immune from tort liability in all cases wherein the government agency is engaged in the exercise or discharge of a governmental function.” MCL 691.1407(1); MSA 3.996(107)(1). The Legislature has defined “governmental function” as “an activity which is expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, or other law.” MCL 691.1401(f); MSA 3.996(101)(f). In Ross v Consumers Power Co (On Rehearing), this Court stated that:
When a governmental agency engages in mandated or authorized activities, it is immune from tort liability, unless the activity is proprietary in nature (as defined in § 13) or falls within one of the other statutory exceptions to the governmental immunity act. Whenever a governmental agency engages in an activity which is not expressly or impliedly mandated or authorized by constitution, statute, or other law (i.e., an ultra vires activity), it is not engaging in the exercise or discharge of a governmental function. The agency is therefore liable for any injuries or damages incurred as a result of its tortious conduct. [Citations omitted.]
Kootsillas argues that the operation of the city’s landfill is an ultra vires activity. Therefore, the city is not entitled to immunity. He acknowledges that, with respect to a municipality’s collection and disposal of its own garbage, its activities involve a governmental function. Curry v Highland Park, 242 Mich 614, 623; 219 NW 745 (1928). Cities have a statutory right to own and run facilities to dispose of their own waste and garbage. MCL 123.241; MSA 5.2661, MCL 123.261; MSA 5.2681. Moreover, they may form agreements jointly to run the facilities. MCL 123.241; MSA 5.2661.
IV
The fact that a landfill accepts garbage from outside its borders for a fee does not turn the activity into an ultra vires one. The collection of garbage is a matter of public health. Matters of public health are state concerns, not singularly local ones. Id. When municipalities collect garbage and run disposal sites, they are acting as an arm of the state. Curry, supra. Therefore, a city’s disposal of garbage from areas outside its jurisdiction continues to be a matter of public health and a governmental function. Curry, supra at 623. However, the fact that garbage collection and disposal is a governmental function does not mean that a city cannot be held liable for its employees’ tortious conduct. It may be liable if the activity is proprietary in nature. Hyde v Univ of Michigan Bd of Regents, 426 Mich 223, 254; 393 NW2d 847 (1986). The proprietary function exception to governmental immunity provides in pertinent part:
The immunity of the governmental agency shall not apply to actions to recover for bodily injury or property damage arising out of the performance of a proprietary function as defined in this section. Proprietary function shall mean 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. [MCL 691.1413; MSA 3.996(113).]
We previously held that the definition of proprietary function is clear and unambiguous. Hyde, supra at 257. Two tests must be satisfied: 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. Id. at 258.
In determining whether the agency’s primary purpose is to produce a pecuniary profit, we stated that certain considerations should be taken into account. The first is whether a profit is actually generated.
The fact that a governmental agency pursues an activity despite consistent losses may be evidence that the primary purpose is not to make a pecuniary profit, but it is not conclusive evidence. Conversely, the fact that the activity consistently generates a profit may evidence an intent to produce a profit. [Id. at 258 (citations omitted).]
The second consideration is “where the profit generated by the activity is deposited and how it is spent.”
If the profit is deposited in the governmental agency’s general fund or used to finance unrelated functions, this could indicate that the activity at issue was intended to be a general revenue-raising device. If the revenue is used only to pay current and long-range expenses involved in operating the activity, this could indicate that the primary purpose of the activity was not to produce a pecuniary profit. [Id. at 259 (citations omitted).]
It is clear that the primary purpose of the city of Riverview landfill was to produce a pecuniary profit. The city’s financial records establish that, from 1982 through 1990, the landfill consistently generated a substantial profit, ultimately exceeding seven million dollars.
Moreover, the profit generated was used to fund other city projects. Landfill profits were spent on the expansion of the fire hall and the purchase and modification of a building to house city hall. The profits also helped fund city operations, such as the police and fire departments, the city library, the city ski hill, and the department of public services.
Finally, the city’s millage rate has steadily declined, dipping from 18.38 mills in the early 1980s to 13.88 mills in the early 1990s. The drop is due, in part, to the availability of landfill revenue that was transferred to the general fund.
Next, it must be determined whether the activity is one “normally supported by taxes or fees.” MCL 691.1413; MSA 3.996(113). When deciding whether an activity satisfies the second part of the proprietary function test, it is important to consider the type of activity under examination. In this case, it is more than the operation of a municipal landfill. It is the operation of a commercial landfill that accepts garbage, not merely from the city of Riverview, but from communities as distant as Ontario, Canada. An enterprise of such vast and lucrative scope is simply not normally supported by a community the size of the city of Riverview either through taxes or fees.
The fact that the city charges fees to garbage haulers unloading refuse into its landfill does not alter this conclusion. Any governmental activity must exact a fee if it is to produce a pecuniary profit. If imposition of a use fee like Riverview’s would suffice to defeat the proprietary function exception to governmental immunity, almost no city activity would subject a city to liability. That could not have been the intention of the Legislature.
The city of Riverview is engaging in a proprietary function, entering the business of waste disposal for the purpose of raising funds and making a profit. The Legislature has decided that a municipality should not be allowed to escape liability for its negligence when participating in a proprietary function. Under the circumstances present in this case, the government should be held to the same standard as any other business venture.
v
Under the facts presented in this case, we conclude that the landfill is a proprietary function. Therefore, we affirm the Court of Appeals decision remanding the matter to the trial court for further proceedings.
Mallett, C.J., and Brickley, Cavanagh, Boyle, Weaver, and Taylor, JJ., concurred with Kelly, J.
If the hauler had an account with the city, the account was credited.
420 Mich 567, 620; 363 NW2d 641 (1984).
This statute was repealed by 1994 PA 451. It is now MCL 324.4301; MSA 13A.4301.
The city council of a city, whether organized under the general law or special charter, or the president and board of trustees of a village may establish and maintain garbage systems or plants for the collection and disposal of garbage in the city or village, and may levy a tax not to exceed 3 mills on the dollar on all taxable property in the city or village according to the valuation of the same, as made for the purpose of state and county taxation by the last assessment in the city or village for these purposes.
The city conceded this point for purposes of summary disposition.
Deposition testimony indicates that, without the income from the landfill, the city would be obligated either to reduce general operations or increase revenue through other means, such as raising taxes.
According to Mayor Peter Rotteveel, landfill revenue transferred to the general fund to maintain or lower property taxes has ranged from $86,000 in 1986 to $1.3 million in 1991. The savings to the taxpayer amounts to between four and six mills.
As we noted in Hyde, it does not matter if the landfill is actually supported by taxes or fees. Id. at 260, n 32.
The city of Riverview had approximately 14,000 residents at the time in question.
In Hyde, we held, without explanation, that financial fees charged for medical services and taxes levied by participating communities financed the operation of the hospitals under consideration. Therefore, the second part of the proprietary function test was not satisfied. Id. at 259-260. Because we had already concluded that part one of the test had not been satisfied, the holding regarding part two is dicta.
This opinion should not be read to change the way courts should interpret the exceptions to governmental immunity. They are to be narrowly construed. This is an unusual case, one in which the government has chosen to run a commercial enterprise for the purpose of reaping a pecuniary profit. Because of the breadth of the enterprise, this case is of the type that the proprietary function statute intended to address, even when the exception is given a narrow construction. | [
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YOUNG, J.
In this case we consider whether a “design defect” claim is cognizable under the public building exception to governmental immunity, MCL 691.1406. The plain language of the public building exception imposes a duty only to “repair and maintain” a public building. In the absence of any additional language addressing design defects, we hold that the public building exception to governmental immunity does not permit a cause of action premised upon an alleged design defect. We disavow any dicta to the contrary in our earlier cases and overrule any cases, such as Sewell v Southfield Pub Schools and Williamson v Dep’t of Mental Health, that can be construed to stand for the proposition that design defects fall within the public building exception. However, because plaintiffs complaint alternatively alleged that defendant Michigan Department of Transportation (MDOT) failed to repair and maintain the public building, we remand to the Court of Claims to determine whether plaintiffs suit may proceed with respect to these allegations. Accordingly, we affirm the Court of Appeals reversal of summary disposition in favor of MDOT, reverse the Court of Appeals holding that design defects are actionable under the public building exception, and remand the case to the Court of Claims for further proceedings consistent with this decision.
i. facts and procedural history
Plaintiff Karen Renny visited a rest area in Roscommon County, Michigan, in January 2000. She alleged that while leaving the rest area building, she slipped on a patch of snow and ice on the sidewalk in front of the doorway and suffered serious injuries to her right wrist. Plaintiff sued MDOT, alleging that her injuries resulted from a defective condition of the rest area building. According to plaintiff, “by [MDOT] designing, con structing, keeping and/or maintaining” the rest area in a defective condition, melted snow and ice accumulated on the sidewalks in front of the entranceway and created a hazardous, slippery surface. Plaintiff attributed the accumulated snow and ice, in part, to MDOT’s failure to install and maintain gutters and downspouts around the roof of the building. Plaintiff maintained that gutters and downspouts would have safely channeled the snow and ice that melted off the roof away from the sidewalks. Moreover, plaintiff alleged that MDOT had actual or constructive notice of these defects for more than 90 days before the accident, but failed to remedy them. MDOT moved for summary disposition, which the Court of Claims granted on the basis of governmental immunity.
In a published per curiam decision, the Court of Appeals reversed the Court of Claims. The panel held that plaintiffs claim was cognizable as a design defect claim under the public building exception. It further concluded that plaintiffs injured wrist was directly attributable to a dangerous or defective condition of the building itself even though the dangerous condition of snow and ice existed outside the building.
This Court granted MDOT’s application for leave to appeal.
II. standard of review
This Court reviews de novo motions for summary disposition. Questions of statutory interpretation are questions of law that are also reviewed de novo by this Court. This Court approaches the task of statutory interpretation by seeking to give effect to the Legislature’s intent as expressed in the statutory language. “When the language of a statute is unambiguous, the Legislature’s intent is clear and judicial construction is neither necessary nor permitted.”
III. ANALYSIS
This case pivots on the proper interpretation of the public building exception to governmental immunity. MCL 691.1406 states, in pertinent part, that
[g]overnmental agencies have the obligation to repair and maintain public buildings under their control when open for use by members of the public. Governmental agencies are liable for bodily injury and property damage resulting from a dangerous or defective condition of a public building if the governmental agency had actual or constructive knowledge of the defect and, for a reasonable time after acquiring knowledge, failed to remedy the condition or to take action reasonably necessary to protect the public against the condition. [Emphasis added.]
This Court has held that in order for a plaintiff to avoid governmental immunity under the public build ing exception, the plaintiff must prove that (1) a governmental agency is involved, (2) the public building in question is open for use by members of the public, (3) a dangerous or defective condition of the public building itself exists, (4) the governmental agency had actual or constructive knowledge of the alleged defect, and (5) the governmental agency failed to remedy the alleged defective condition after a reasonable amount of time. In this case, the parties dispute whether plaintiff has satisfied the third element, that is, whether plaintiff was injured by a dangerous or defective condition of the rest area building.
Plaintiff maintains that the dangerous or defective condition of the rest area building arose from a design defect, and that a design defect claim is cognizable under the public building exception. She rests her argument on certain language from Bush v Oscoda Area Schools that we have reiterated in Reardon v Dep’t of Mental Health and other subsequent cases. In Bush, the plaintiff, the mother of an injured student, sued the student’s school and school officials after a jug of wood alcohol exploded in a non-laboratory classroom temporarily used to hold science class. Concluding that the plaintiff stated a claim against the defendants under the public building exception, this Court opined that
[t]he defective building provision is structurally similar to the defective highway provisions. It states a duty, “repair and maintain”, and in providing a cause of action extends it to “a dangerous or defective condition of a building”. We construe the defective building provision as we have the defective highway provision. Governmental agencies are subject to liability for a dangerous or defective condition of a public building without regard to whether it arises out of a failure to repair and maintain.
As in the highway cases, a building may be dangerous or defective because of improper design, faulty construction or the absence of safety devices.
In Reardon, this Court quoted Bush approvingly to make the point that the public building exception applies only where an injury “is occasioned by a physical defect or dangerous condition of the building itself” rather than where an injury merely occurs on the premises. In its discussion of the governmental agency’s duty under the public building exception, the Reardon Court opined that
[t]he first sentence [of the public building exception] imposes upon governmental agencies the duty to “repair and maintain public buildings under their control....” In Bush v Oscoda Area Schools, 405 Mich 716; 275 NW2d 268 (1979), we held that this duty is not strictly limited to the repair or maintenance of public buildings. Instead, we held that “a building may be dangerous or defective because of improper design, faulty construction or the absence of safety devices.” Id. at 730. We reiterate this proposition, as the holding in Bush is entirely consistent with today’s conclusion that the injury must be occasioned by the dangerous or defective condition of the building itself. As long as the danger of injury is presented by a physical condition of the building, it little matters that the condition arose because of improper design, faulty construction, or absence of safety devices. However, while the public building exception is not strictly limited to failures of repair or maintenance, the Legislature’s choice of those terms to define the governmental duty is indicative of its intention regarding the scope of the exception. The duty to repair and maintain a premises clearly relates to the physical condition of the premises.
Citing Bush and Reardon, this Court has stated elsewhere that a defective design claim falls within the public building exception. Plaintiff rests her design defect claim on this line of cases.
MDOT responds that this Court has never squarely held that a design defect is cognizable under the public building exception. According to MDOT, Reardon's discussion of Bush and design defect claims was obiter dictum. Reardon considered and rejected the notion that the public building exception extended to injuries that occur in a public building but were not occasioned by a physical condition of the building itself. It did not pass on the merits of a design defect claim.
Moreover, MDOT argues that Reardon mischaracterized Bush as holding that design defects fall within the public building exception, when Bush in fact only considered the intended use of the classroom and the lack of safety devices in its holding. Thus, MDOT argues, it was unnecessary for the Bush Court to opine on the propriety of a design defect claim and its statement on that question was dictum. Finally, MDOT points out, this Court more recently has openly questioned whether a design defect claim fits within the public building exception. In de Sanchez v Dep’t of Mental Health, we stated that
[d]espite the oft-cited proposition that a public building may be dangerous or defective because of its improper design, the issue whether a design defect may actually constitute a defect in a public building sufficient to invoke the public building exception has caused this Court considerable difficulty. Nonetheless, that issue is not before this Court.
In short, MDOT argues, any support provided by the caselaw on which plaintiff heavily relies is illusory.
More specifically, MDOT contends that plaintiffs reliance on Bush is misplaced because this Court has since dismantled the reasoning underpinning Bush. The majority in Bush relied heavily on the structural and linguistic similarities between the highway exception and the public building exception. Therefore, because our caselaw held that a design defect claim fell within the highway exception, the Bush majority placed the same judicial gloss on the public building exception. Beginning with Nawrocki v Macomb Co Rd Comm, this Court returned to a more textually faithful interpretation of the highway exception. This trend continued in Hanson v Mecosta Co Rd Comm, where this Court disavowed the line of highway exception cases that recognized a design defect claim and held that “the highway exception does not include a duty to design, or to correct defects arising from the original design or construction of highways.” MDOT reasons syllogistically, then, that this Court, since deciding Bush, has recognized that the highway exception does not allow for a design defect claim. It was vital to the Bush majority’s logic that the highway exception permitted design defect claims. Now that this central premise has been repudiated, there is no reason for a similarly erroneous statutory construction to persist with regard to the public building exception.
With respect to the plain language of the statute, MDOT notes that plaintiffs position is entirely at odds with the statute itself. The statutory language refers only to the governmental agency’s duty to “repair and maintain public buildings,” and does not refer to any duty to design a public building. Therefore, to hold that the language of the statute includes a design defect claim is inconsistent with its plain language.
While plaintiff relies almost exclusively on caselaw, MDOT largely appeals to the statutory language. In order to decide an issue of statutory construction, we must first resort to the plain language of the public building exception to determine the Legislature’s intent. We agree with MDOT that this provision clearly does not support a design defect claim. The first sentence of MCL 691.1406 states that “ [governmental agencies have the obligation to repair and maintain public buildings under their control when open for use by members of the public.” This sentence unequivocally establishes the duty of a governmental agency to “repair and maintain” public buildings. Neither the term “repair” nor the term “maintain,” which we construe according to their common usage, encompasses a duty to design or redesign the public building in a particular manner. “Design” is defined as “to conceive; invent; contrive.” By contrast, “repair” means “to restore to sound condition after damage or injury.” Similarly, “maintain” means “to keep up” or “to preserve.” Central to the definitions of “repair” and “maintain” is the notion of restoring or returning something, in this case a public building, to a prior state or condition. “Design” refers to the initial conception of the building, rather than its restoration. “Design” and “repair and maintain,” then, are unmistakably disparate concepts, and the Legislature’s sole use of “repair and maintain” unambiguously indicates that it did not intend to include design defect claims within the scope of the public building exception.
The second sentence of MCL 691.1406, which imposes habihty on governmental agencies “for bodily injury and property damage resulting from a dangerous or defective condition of a pubhc building,” does not expand the duty beyond the repair and maintenance of a pubhc building. The phrase imposes habihty where the “dangerous or defective condition of a pubhc building” arises out of the governmental agency’s failure to repair and maintain that building. It is not suggestive of an additional duty beyond repair and maintenance. There is no reason to suspect that the Legislature intended to impose a duty to prevent “dangerous or defective condition[s]” in pubhc buildings in a manner whohy unrelated to the obhgation clearly stated in the first sentence.
Contrary to the dissent’s suggestion that Bush represents an unbroken precedent, Bush has been consistently undermined by subsequent decisions of this Court. First, Bush was succeeded by Ross v Consumers Power Co (On Rehearing), a case that fundamentally altered the way we construe the governmental immunity statute. Second, we agree with MDOT that Hanson collapsed the “logic” in Bush supporting a design defect claim. Finally, we also note that the propriety of a claim under the public building exception premised on a lack of safety devices is also undermined by Fane v Detroit Library Comm — a decision authored by the dissent. In Fane, we held under the facts of that case that an elevated terrace was “of a public building.” We emphasized that the public building exception only refers to injuries resulting from dangerous or defective conditions “of a public building” and that a fixtures analysis is useful in determining whether the condition giving rise to the injury is “of a public building.” In light of Fane, we fail to see how injuries from an exploding jug could have resulted from a dangerous or defective condition “of a public building” or could survive a fixtures analysis under Fane.
Because we conclude that the statutory language is unambiguous and imposes a duty only to repair and maintain a public building, we must reconsider our earlier cases suggesting that a design defect claim is cognizable under the public building exception. As we said in de Sanchez, it is an oft-cited proposition that design defect claims fall within the public building exception. Yet there are few instances where this Court or the Court of Appeals has endorsed a design defect claim. We agree with MDOT that Bush involved an alleged lack of safety devices and was not a design defect case, so its discussion of the latter was dictum. Although at one point the Bush majority stated that “[p]laintiff has alleged that the improper design of the classroom and absence of safety devices rendered it unsafe as a science classroom,” elsewhere it opined that “[p]laintiff s defective building theory is based on lack of safety devices.” We also agree with MDOT that Reardon was not a design defect case and its discussion of design defect claims was dictum. Rather, Reardon held that the public building exception “impose[s] a duty to maintain safe public buildings, not necessarily safety in public buildings.”
In subsequent cases, this Court has not endorsed a plaintiffs design defect claim. In Hickey, supra, responding to the plaintiffs argument that the alleged improper design of a Michigan State University Department of Public Safety holding cell caused the decedent to hang himself, this Court stated that “ [although we agree that a claim of improper design may allow the public building exception to be applied, that outcome is not required” because the connection between the alleged design defect and the injury was too tenuous to invoke the exception. So, this Court did not pass judgment on the plaintiffs design defect claim. In de Sanchez, supra, where the decedent hung himself in a restroom, this Court expressly stated that the plaintiffs design defect claim was not before the Court. In Johnson, supra, another suicide case, a majority of this Court concluded that the public building exception was applicable because the police station holding cell was defective given its intended use as a suicide-deterrent cell. This Court did not focus on a design defect claim.
In addition to the Court of Appeals decision in this case, we are aware of only two cases where a design defect claim was recognized implicitly or explicitly by a court. In Williamson, supra, the Court of Appeals affirmed the Court of Claims determination that the plaintiff alleged a design defect or absence of safety features that was a proximate cause of the decedent’s death. The decedent, a mildly retarded, epileptic teenager, drowned while taking an unsupervised bath at a Department of Mental Health residential treatment facility. The Court of Claims found that the plaintiff proved by a preponderance of the evidence that the improper design of the shower and bathing facilities constituted a dangerous or defective condition of the public building that the defendant had a duty to alter or modify with safety devices.
And, in Sewell, supra, this Court reversed summary disposition in favor of the defendant Southfield Public Schools, where the minor plaintiff suffered a spinal cord injury after diving into a shallow pool at the high school, holding that the plaintiff created a question of fact regarding the existence of an actual defect in the pool. We examined the intended use of the pool, and held that diving, and not just swimming, was an intended use. Second, we held that the plaintiffs’ allegations of faulty construction and improper design sufficiently alleged an actual defect. These defects included an uneven pool floor and mismarked depth markers. The plaintiffs’ experts opined about the poor design and layout of the pool, claiming that there was a design failure. We disagreed with the lower courts that this was merely a case of improper supervision.
In light of our foregoing analysis of the public building exception, we disavow the dicta in earlier decisions from this Court such as in Bush and Reardon, and any dicta from Court of Appeals decisions, suggesting that a design defect claim falls within the plain language of the provision. Also, we overrule any cases such as Sewell and Williamson that can be construed to stand for the proposition that design defects fall within the public building exception.
IV APPLICATION
Returning to the facts of this case, plaintiff alleges that she was injured by a dangerous or defective condition of the rest area building. She argues that the absence of gutters and downspouts, among other defects in the building, permitted an unnatural accumulation of snow and ice on the sidewalks in front of an entranceway and created slippery, hazardous conditions for members of the public. Consistent with today’s decision, to the extent that plaintiffs claim is premised on a design defect of a public building, it is barred by governmental immunity. However, plaintiff also alleged that MDOT failed to repair and maintain the rest area building. Indeed, there is record evidence suggesting that the rest area building was once equipped with gutters and downspouts. Although we do not pass judgment on the legal viability of plaintiffs claim or whether her claim may ultimately proceed to trial, plaintiff sufficiently pleaded in avoidance of governmental immunity. Accordingly, we remand to the Court of Claims to determine whether plaintiffs suit may proceed with respect to the alleged failure to repair and maintain the public building.
V CONCLUSION
We hold that design defect claims are not cognizable under the unambiguous, plain language of the public building exception, which refers only to the governmental agency’s duty to “repair and maintain” the public building. Therefore, while we affirm the Court of Appeals reversal of summary disposition in favor of MDOT, we reverse the Court of Appeals holding that design defects are actionable under the public building exception, and we remand the case to the Court of Claims for further proceedings consistent with this decision.
Taylor, C.J., and CORRIGAN and Markman, JJ., concurred with Young, J.
456 Mich 670; 576 NW2d 153 (1998).
176 Mich App 752; 440 NW2d 97 (1989).
Coplaintiff Charles Renny filed a claim for loss of consortium, which is derivative of his wife’s claim. Therefore, we will refer to plaintiff singularly.
We do not pass judgment on the legal viability of plaintiffs allegations with respect to a failure to maintain and repair the rest area building, nor should this opinion be construed as holding that plaintiff is entitled to proceed to trial. We simply observe that plaintiff in her complaint minimally pleaded in avoidance of governmental immunity, and therefore we remand for further proceedings on that basis. See part IV of this opinion.
Plaintiff also sued the Roscommon County Road Commission and Roscommon Township in a separate circuit court action that was consolidated with this case at the trial court level. Both parties were dismissed, and neither party is participating in this appeal.
Renny v Dep’t of Transportation, 270 Mich App 318; 716 NW2d 1 (2006).
477 Mich 958 (2006). In our order granting leave, we asked the parties to address three questions: (1) whether the Court of Appeals correctly characterized the alleged dangerous or defective condition in this case as a design defect; (2) whether the public building exception, which obligates a governmental agency “to repair and maintain public buildings,” permits a party to bring a design defect claim; and (3) whether the Court of Appeals conclusion that the icy sidewalk was not a transitory condition is contrary to this Court’s decision in Wade v Dep’t of Corrections, 439 Mich 158; 483 NW2d 26 (1992).
Grimes v Dep’t of Transportation, 475 Mich 72, 76; 715 NW2d 275 (2006).
Id.
Griffith v State Farm Mut Automobile Ins Co, 472 Mich 521, 526; 697 NW2d 895 (2005).
Id.
de Sanchez v Dep’t of Mental Health, 467 Mich 231, 236; 651 NW2d 59 (2002).
Plaintiff argues alternatively that the defective condition of the rest area building arose from a failure to maintain gutters around the building.
405 Mich 716; 275 NW2d 268 (1979).
430 Mich 398; 424 NW2d 248 (1988).
See, e.g., Johnson v Detroit, 457 Mich 695; 579 NW2d 895 (1998); Sewell, supra; Hickey v Zezulka (On Resubmission), 439 Mich 408; 487 NW2d 106 (1992); see also Williamson, supra.
17 Bush, 405 Mich at 730.
Reardon, 430 Mich at 400.
19 Id. at 409-410.
See, e.g., Johnson, supra; Sewell, supra; Hickey,s supra.
455 Mich 83, 96; 565 NW2d 358 (1997).
463 Mich 143; 615 NW2d 702 (2000).
465 Mich 492, 502; 638 NW2d 396 (2002). The Court of Appeals also signaled a more principled approach to the highway exception. See, e.g., Wechsler v Wayne Co Rd Comm, 215 Mich App 579, 587-588; 546 NW2d 690 (1996) (“The Legislature thus did not purport to demand of governmental agencies having jurisdiction of highways that they improve or enhance existing highways____The only statutory requirement and the only mandate that, if ignored, can form the basis for tort liability is to ‘maintain’ the highway in reasonable repair.”).
Echelon Homes, LLC v Carter Lumber Co, 472 Mich 192, 196; 694 NW2d 544 (2005).
The American Heritage Dictionary of the English Language, New College Edition (1978).
Id.
Id.
According to the dissent, it “defies logic” that a governmental agency would have a duty to repair and maintain a pubhc building but would not be liable if a public building could have been more safely designed. Such a statement fails to recognize that the very purpose of governmental immunity is to limit the government’s exposure to habihty. Clearly, this is precisely what the Legislature intended to convey with its dehberately chosen words. It is entirely logical that it would have chosen not to expose a governmental agency to habihty for a design defect. The duty to repair and maintain a public building does not impose an unforeseeable and potentially significant liability on governmental agencies. The same cannot be said of a duty to design a safe public building, which would be measured in hindsight by courts that are ill-equipped to consider the budgetary and architectural trade-offs involved in the construction of any structure. Thus, far from being illogical, a narrowly tailored duty of repair and maintenance is entirely consistent with the government’s interest in limiting its liability.
420 Mich 567; 363 NW2d 641 (1984).
465 Mich 68; 631 NW2d 678 (2001).
The dissent claims that the Legislature acquiesced in Bush’s erroneous interpretation of the public building exception. That this Court highly disfavors the doctrine of legislative acquiescence has been elsewhere stated. See, e.g., Karaczewski v Farbman Stein & Co, 478 Mich 28; 732 NW2d 56 (2007); Grimes, 475 Mich at 84; Robinson v Detroit, 462 Mich 439, 465; 613 NW2d 307 (2000); Donajkowski v Alpena Power Co, 460 Mich 243, 261; 596 NW2d 574 (1999). Thus, for the reasons stated in these opinions, the dissent’s reliance on this spurious rule is a nonstarter.
Bush, 405 Mich at 730-731, 728 n 7.
Reardon, 430 Mich at 415 (emphasis in original). Thus, the dissent attributes too much significance to the Reardon Court’s recitation of the design defect language from Bush and certainly is incorrect in suggesting that we are overturning Reardon.
Hickey, 439 Mich at 423 (opinion by Brickley, J.).
de Sanchez, 455 Mich at 96.
To the extent that it overrules Sewell, our decision today does not contravene the policy considerations that underpin the doctrine of stare decisis. See Robinson, supra. First, without question, Sewell relied on dicta originating in Bush that was clearly inconsistent with the plain language of the statute. This explains why the dissent treats the duty of safe design as “implicit” in the statute rather than “explicit” because that duty is nowhere to be found in the actual words. Post at 509, 515. Therefore, we are faithfully discharging our judicial responsibility by accurately interpreting and applying the statutory language in this case. Also, we are largely disavowing dicta rather than overruling prior established cases. We will not elevate dicta above the plain language of a statute. See Hanson, 465 Mich at 501 n 7. And, by repudiating dicta that is patently contrary to the statutory language, we are simply enforcing the plainly expressed intent of the Legislature.
Second, the practical workability of a design defect claim has elsewhere been called into question by this Court. A majority of this Court (which included the dissenting justice) noted that “whether a design defect may actually constitute a defect in a public building sufficient to invoke the public building exception has caused this Court considerable difficulty.” de Sanchez, 455 Mich at 96. Third, turning to the question of reliance interests, it is hard to imagine that overruling Sewell and precluding design defect claims will be so jarring as to create practical, real-world dislocations. Robinson, 462 Mich at 466-467. Finally, contrary to what the dissent claims, there have been substantial changes in the law since Bush was decided, which undercuts the notion that Bush has functioned as an integral part of our jurisprudence for 28 years. As we discussed earlier, subsequent cases from this Court have undermined Bush and its progeny, including Sewell. See Fane, supra; Hanson, supra; Nawrocki, supra; Ross, supra. The dissent’s correct assertion that Hanson dealt with a different portion of the governmental tort liability act and its belief that Hanson was wrongly decided misses the larger point that the law of governmental immunity has significantly changed since Bush was decided.
For instance, her complaint alleged:
11. This accumulation of ice and snow occurred as a result of the defective condition of the roof of the building located immediately above this entrance/exit way to the building. By way of illustration, not limitation, these defective conditions include the failure to install and maintain gutters and. downspouts to redirect melting snow and ice on the roof above the entrance/exit away from the walkway.
19. Defendant breached this statutory duty [MCL 691.1406] by designing, constructing, keeping and/or maintaining the restroom building described herein which had dangerous and/or defective conditions.... | [
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Per Curiam.
Defendant was convicted by a jury of breaking and entering, MCL 750.110; MSA 28.305, and of larceny in a building, MCL 750.360; MSA 28.592. Defendant was sentenced to three years’ probation and now appeals as of right. We affirm.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The origin of this case is in the breaking and entering of a building on West Vine Street in Kalamazoo and the subsequent larceny from that building of a computer monitor and keyboard, both occurring at approximately 4:00 A.M. on January 12, 1995. Officer Stanley McDonald of the Kalamazoo Public Safety Department responded to the report of the breaking and entering as did Officer Eric Arrans, with his tracking dog. The tracking dog led Officer Arrans to a garbage dumpster behind the Vine Street building, where Officer Arrans later found the computer monitor and keyboard. In the alley behind the building, Officer Arrans noticed some gloves and hats lying in the alleyway. The tracking dog then led Officer Arrans to a local park where other officers had detained three men, including defendant.
At trial, the testimony of two witnesses was particularly important to the major question presented on appeal; these witnesses are Officer McDonald and Jayne Belanger. Officer McDonald testified not only about his response to the report of the breaking and entering but also about several other events, one before and one after the apprehension of defendant. Regarding the prior event, Officer McDonald testified that, while on his regular patrol on January 12, 1995, at approximately 3:00 A.M., he observed three men, including defendant, at a Dairy Mart store that was located about eight or nine blocks from the Vine Street building. Officer McDonald testified that one or more of the men made a purchase at the store. Officer McDonald testified that the brown cotton gloves found in the alleyway at the scene of the breaking and entering were those that he had seen one of the three men carry when they left the Dairy Mart. Officer McDonald also testified that, near the Dairy Mart, he saw one of these men hand the gloves to another, identified as a codefendant. Officer McDonald testified, however, that he did not remember which of the two men (defendant or the third man) handed the gloves to the codefendant.
Regarding the subsequent event, Officer McDonald testified that, after the apprehension of defendant, he returned to the Dairy Mart and interviewed the store clerk, Belanger. Officer McDonald testified that the police report that he prepared at the time “state [d] a conclusion on [his] part” and that he was led to that conclusion by “[a] discussion with the store clerk, and the description of the three subjects that had made the purchase, attempting to identify which subject made the purchase.” The prosecution asked Officer McDonald for his conclusion, defense counsel objected on the ground of lack of foundation and, after reviewing Officer McDonald’s report, the trial court sustained the objection.
The prosecution also called Belanger, who testified that three men came into the Dairy Mart at approximately 3:00 A.M. on January 12, 1995, and that one of the men purchased, among other items, a pair of brown gloves. Belanger also testified that a police officer had asked her questions about this incident and that she was able to give the police officer some fairly specific information at the time. During her in-court testimony, however, Belanger could not identify defendant as being one of the three men who came into the Dairy Mart.
Following this testimony, the prosecution made an offer of proof outside the jury’s presence. The prosecution stated that it would recall Officer McDonald, who would testify that Belanger gave him specific information regarding the three men in the Dairy Mart and that only one of the three men Officer McDonald had seen leaving the store matched the description that Belanger gave of the man who purchased the gloves. The prosecution sought admission of the proffered testimony under MRE 801(d)(1)(C). The trial court ruled that the proffered testimony did not fall within the ambit of MRE 801(d)(1)(C), noting that “we do not have here a — true statement of identification.” The trial court also noted that “[The] officer— what — what—is being offered to the jury is Officer McDonald’s conclusion predicated upon a statement attributed to a witness who here before the jury did not make the same statement.”
On the next day of trial, the prosecution renewed its argument with respect to MRE 801(d)(1)(C), stating that Officer McDonald would testify that Belanger had said that the tallest of the three men purchased the gloves. On the basis of Officer McDonald having seen the three men in the Dairy Mart parking lot, the prosecution contended that this description could only match defendant. After again reviewing Officer McDonald’s report, the trial court reversed its previous ruling and allowed the proofs to be reopened, stating:
I will reverse my previous thinking on this. I think this is — this is a classical [sic] example of a declaration not being hearsay, if it’s of identification of an individual made after perceiving the individual, and the person who made the statement, the declarant, is available for cross-examination.! ]
The prosecution then recalled Belanger, who stated that, although she had given Officer McDonald some information, she could not recall what she told him about who purchased the gloves. After Belanger read Officer McDonald’s report, the following exchange took place:
[Prosecutor:] Okay. Now, after looking at the report that Officer McDonald made does that refresh your recollection at all as to, specifically, what you told him, regarding the identification of the person who made the purchase?
[Witness:] From what I can recall, he came back in and asked me what they purchased and wh — wh—you know, who purchased them and how many, you know, how many people were at the counter at the time. The same questions you’d asked me. And I’ve told ‘em pretty much the same thing: They bought brown gloves, and only one person bought something.
[Prosecutor:] All right. And, do you recall, specifically, what it is that you related to him, as far as identifying which person? After — after reviewing this do you recall, specifically, what it is you told him regarding which person it is who made the purchase?
[Witness:] No. I’m sorry.
[Prosecutor:] But — but, you did have in your mind, at the time, the identification. It was fresh in your mind as the identification of the person who did make the purchase.
[Witness:] Yes.
[Prosecutor:] Okay. And you related that to Officer McDonald.
[Witness:] Yes.
[Prosecutor:] All right. Thank you.[ ]
The prosecution then recalled Officer McDonald, who testified that, in his interview with Belanger at the Dairy Mart, he asked her a number of questions in an attempt to clarify her recollection of which of the three men actually purchased the gloves. Officer McDonald further testified that he and Belanger discussed such matters as the race, age, height, weight, clothing, and style of haircut of the three men, although he did not recall what exactly Belanger had told him about the purchaser of the gloves. Officer McDonald did testify that Belanger “was able to give me a very care — clear idea of which one had purchased the gloves.” Officer McDonald testified that he did not note in his report “the exact specific of — of the items that we discussed.” Officer McDonald said that the information given to him “was very clear that — that it matched only one” of the three men, that is defendant. On cross-examination, Officer McDonald stated that he did not include in his report any of the identifying items that he discussed with Belanger and he only noted that “the conclusion we came to was Mr. Talanda Sykes.”
During closing argument, the prosecution wove this testimony together:
It’s the Prosecution’s theory and argument that the oldest of the three, the Defendant here; the tallest of the three, the Defendant here; had gone in and purchased the gloves and given them to Prentiss Anderson; the person whose footprint is eventually identified inside of the building; and, that he was there, and he was, basically, the leader of this situation, that he had these gloves for a purpose. He was giving the gloves to Prentiss Anderson, because now they’re gonna go out and around, and they’re going to find something to steal.
n. THE HEARSAY OBJECTION
A. HEARSAY GENERALLY
Under the Michigan Rules of Evidence, hearsay is defined as “a statement, other than the one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” MRE 801(c). A “statement” is “(1) an oral or written assertion or (2) nonverbal conduct of a person, if it is intended by the person as an assertion.” MRE 801(a). A “declarant” is “a person who makes a statement.” MRE 801(b).
As noted by Justice Cavanagh in his dissent in People v Malone, 445 Mich 369, 399; 518 NW2d 418 (1994):
Hearsay is repugnant to the truth-seeking function of litigation because the statement is made in the absence of testimonial safeguards implemented to foster reliability. At trial a witness must testify under oath or affirmation, exposed to the threat of perjury. The trier of fact can observe a witness’ demeanor and physical response to offered testimony. Furthermore, a witness is exposed to contemporaneous cross-examination regarding his offered assertions. Binder, Hearsay Handbook (2d ed), § 3.01, p 59. Cross-examination is “beyond any doubt the greatest legal engine ever invented for the discovery of truth.” 5 Wigmore (Chadboum rev), § 1367, p 32. The safeguards are believed to aid the exposure of possible ambiguity, insincerity, faulty perception, and erroneous memory. The absence of the three testimonial safeguards render hearsay statements lintrustworthy.
Thus, the basic objection to hearsay testimony is that if a witness offers an assertion made by a declarant who does not testify — and if the assertion is offered as evidence of the truth of the matter asserted — the trier of fact is deprived of the opportu nity to evaluate the demeanor, responsiveness, and credibility of the declarant, particularly because the declarant cannot be tested by cross-examination.
B. IDENTIFICATION TESTIMONY
In general, testimony about a prior out-of-court identification falls into two categories: testimony by the identifier/declarant and testimony by a third-party witness to the identifier/declarant’s statements. With respect to testimony by an identifier/declarant, even before the adoption of the Michigan Rules of Evidence, Michigan cases have allowed such testimony. For example, in People v Mead, 50 Mich 228, 229; 15 NW 95 (1883), the Court let stand a woman’s testimony that she recognized the defendant as the man who was in her house during a burglary and that she had previously identified the defendant to her husband out of court. In People v Londe, 230 Mich 484; 203 NW 93 (1925), the Court held that it was proper for two witnesses who had seen a robbery to testify that they later identified the defendant as one of the three men who committed the robbery at an out-of-court showup at police headquarters. Also, in People v Poe, 388 Mich 611; 202 NW2d 320 (1972), the Court let stand the identifying witnesses’ testimony of their own prior out-of-court identification. In general, this is logical because, when the identifier/declarant testifies as a witness, the trier of fact has the opportunity to evaluate the demeanor, responsiveness, and credibility of the identifier/declarant, and the identifier/declarant can be tested by cross-examination.
Testimony by a third party about an identifier/declarant’s prior statements of identification arguably, at least before the adoption of MRE 801(d)(1)(C), was a different story. Justice Cooley, writing for the Court in Mead, supra at 230, noted that the trial court properly struck testimony by a tliird party (the identifier’s husband) that the identifier had previously stated to him that she recognized the defendant as the burglar. Thus, while letting stand the identifier/declarant’s in-court testimony about her prior out-of-court identification of the defendant, the Court upheld the exclusion of third-party in-court testimony about the identifier/declarant’s statements at the time of such prior out-of-court identification. Similarly, in Londe, supra at 487, the Court held that while an identifier/declarant may give in-court testi mony regarding an out-of-court identification, a third party who witnessed the out-of-court identification may only testify in court regarding the “circumstances [under which] the identification was made.” In Poe, supra at 618, the Court restricted third-party in-court identification testimony to “ ‘what took place’ and under ‘what circumstances the [out-of-court] identification was made.’ ” The Court defined as inadmissible testimony concerning “the nature or quality of the [out-of-court] identification.” Id.
C. ADOPTION OF THE MICHIGAN RULES OF EVIDENCE
In 1978, the Michigan Rules of Evidence were adopted. MRE 801(d)(1)(C) provides:
A statement is not hearsay if . . . [t]he declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement, and the statement is . . . one of identification of a person made after perceiving the person.
With respect to testimony by an identifier/declarant regarding a prior out-of-court identification, the committee commentary noted:
MRE 801(d)(1)(C) is consistent with prior Michigan law in admitting testimony by a witness as to his own prior statement of identification of a person made after perceiving him. People v Poe, 388 Mich 611; 202 NW2d 320 (1972); People v Londe, 230 Mich 484; 203 NW 93 (1925). [In re the Proposed Michigan Rules of Evidence, 399 Mich 951, 1004 (1977).]
The Michigan Supreme Court dealt with the subject of MRE 801(d)(1)(C)’s treatment of the second type of identification testimony — testimony by a third party about an identifier/declarant’s prior out-of-court statements of identification — exhaustively in Malone, supra. The Court noted that a critical witness, Carey Jackson, had identified the defendant, Donald Malone, at an out-of-court photographic showup but then at trial denied having identified the defendant. The Court further described the situation as follows:
Over the defendant’s objections, attorney James Hall, the attorney appointed to protect the defendant’s right to a fair showup, testified that Carey Jackson identified defendant Malone as “the guy who had the gun,” and signed a statement recording this identification. Attorney Hall also testified that the photographic showup was fair. Officer James Bivens of the Detroit Police Department also testified and confirmed Jackson’s identification and signed statement. The trial court held that the testimony of both Officer Bivens and Attorney Hall was not limited to impeachment of Jackson’s trial testimony and was admissible as substantive evidence under MRE 801(d)(1)(C). [Malone, 445 Mich 374.]
Tlús Court in Malone had affirmed evidentiary rulings by the trial court, thereby rejecting the defendant’s argument that the identification testimony was inadmissible hearsay. People v Malone, 193 Mich App 366, 369-371; 483 NW2d 470 (1992). The Supreme Court affirmed, holding that the testimony of attorney Hall and Officer Bivens about witness Carey Jackson’s prior out-of-court identification of the defendant was not hearsay under MRE 801(d)(1)(C). Malone, 445 Mich 375. Justice Boyle, writing for the majority, stated:
As long as the statement is one of identification, Rule 801(d)(1)(C) permits the substantive use of any prior statement of identification by a witness as nonhearsay, provided the witness is available for cross-examination. 4 Weinstein & Berger, Evidence, ¶ 801(d)(1)(C)[01], pp 801-214 to 801-215.
All that is contemplated is an out-of-court statement of identification (which is simply a particular type of prior statement) and that the out-of-court declarant be subject to cross-examination “concerning” the statement. . . . Further, there is no distinction regarding whether the out-of-court statement is offered by a third party or is the statement of identification of a witness on the stand regarding something the witness previously said. Under the orthodox definition of hearsay, an out-of-court statement offered for the truth is inadmissible, whether offered through its maker or a third party. A statement of identification defined as nonhearsay is substantively admissible under Rule 801, without regard to its proponent. [Id. at 377-378.]
The rule in Malone has, of course, been subsequently followed by this Court. See People v Whitfield, 214 Mich App 348, 350-351; 543 NW2d 347 (1995). Thus, the statement in defendant’s brief that “[t]he Court of Appeals is divided as to whether MRE 801(d)(1) permits a third party to testify to the declarant’s identification of defendant, or only to testify to facts and circumstances surrounding the prior identification” is egregiously wrong. The rule in Michigan under MRE 801(d)(1)(C), as enunciated in Malone and followed by this Court in Whitfield, is that third-party testimony of an out-of-court statement of identification by art identifier/declaxant is substantive norihearsay evidence — and is admissible even if it goes beyond the simple facts and circumstances of the prior out-of-court statement of identification — if the identifie>r/declarant testifies and is subject to cross-examination.
D. THE TESTIMONY MATRIX
The unique facts of this case tend, at least somewhat, to cloud the basic issue with respect to the proper application of MRE 801(d)(1)(C). Each of the two relevant witnesses, Belanger and Officer McDonald, testified twice, on September 22, 1995, and on September 27, 1995. For ease of reference, and as shown on the matrix below, Belanger’s September 22, 1995, testimony will be referred to as “Belanger 1” and her September 27, 1995, testimony will be referred to as “Belanger 2.” Similarly, Officer McDonald’s September 22, 1995, testimony will be referred to as “McDonald 1” and his September 27, 1995, testimony will be referred to as “McDonald 2.”
In Belanger 1, Belanger stated that three men came into the Dairy Mart, one of whom purchased a pair of brown gloves. Belanger remembered that a police officer had questioned her and that she had given that officer fairly specific information, but she could not accurately identify any of the three men who came into the store. The issue with respect to Belanger 1 therefore is whether her out-of-court “fairly specific information” given to Officer McDonald on the morning of January 12, 1995, constituted a “statement” of “identification of a person made after perceiving the person” within the meaning of MRE 801(d)(1)(C). As is frequently the case with lapsed or failing memory, Belanger’s testimony in Belanger 1 is of little help in resolving this issue.
In McDonald 1, Officer McDonald stated that he had interviewed Belanger. The record reflects that Officer McDonald’s police report referred to the discussion with Belanger and to “the description of the three subjects that made the purchase, attempting to identify which subject made the purchase.” Quite clearly, standing alone, this third-party testimony by Officer McDonald of his conversation with the declarant, Belanger, does not set out, other than in the most general terms, a “statement” by Belanger that includes an “identification of a person made after perceiving the person” within the meaning of MRE 801(d)(1)(C).
In Belanger 2, Belanger, when asked about the “identification” of the person who made the purchases, stated that “[t]hey bought brown gloves and only one person bought something.” With some prodding from the prosecution, Belanger then stated that her “identification” of the person who made the purchase was fresh in her mind at the time she related that “identification” to Officer McDonald. Thus, Belanger’s purported statement of identification under MRE 801(d)(1)(C), was contained in the information she related to Officer McDonald concerning the person who made the purchases in the Dairy Mart on the morning of January 12, 1995. In Belanger 2, Belanger again could not recall what she told Officer McDonald and, therefore, her testimony is of little use on this issue, other than to establish the fact that she diii convey some information.
Thus, the critical testimony is that of Officer McDonald in McDonald 2. In his second appearance, Officer McDonald stated that he and Belanger discussed the race, age, height, weight, clothing, and style of haircut of the three men who were in the Dairy Mart, including the purchaser of the gloves. Officer McDonald concluded that Belanger’s description matched only defendant. Thus, the precise issue on appeal is whether Officer McDonald’s testimony, which did not include any statement of identification made by Belanger, about the description Belanger gave to Officer McDonald, is an out-of-court statement of identification of a person made after perceiving the person, within the meaning of MRE 801(d)(1)(C). If it is, then Officer McDonald’s testimony in McDonald 2 was properly admitted; if it is not, then such testimony should not have been allowed.
E. WADE AND ITS PROGENY
At the outset, we note that defendant asserts that the description Belanger gave to Officer McDonald was not a prior statement by Belanger. We disagree. This description was an oral assertion, intended by Belanger to be so. Thus, it was a “statement” by Belanger under MRE 801(a). The more difficult issue, however, is whether this statement was one of identification of a person made after perceiving the person, within the meaning of MRE 801(d)(1)(C).
In this regard, defendant advances the following definition of “identification” from Black’s Law Dictionary (5th ed) at 671:
Proof of identity. The proving that a person, subject, or article before the court is the very same that he or it is alleged, charged, or reputed to be; as where a witness recognizes the prisoner as the same person whom he saw committing the crime; or where handwriting, stolen goods, counterfeit coin, etc., are recognized as the same which once passed under the observation of the person identifying them.
Then, without any attempt to relate this definition to MRE 801(d)(1)(C), defendant asserts that, “This definition of and usage of ‘identification’ as a term of art encompassing the concept of a recognition by the witness of the subject as the same which once passed under the observation of the person identifying them is supported by a review of Michigan and Federal Case (sic) law dealing with identifications.” In support of this assertion, defendant cites United States v Wade, 388 US 218; 87 S Ct 1926; 18 L Ed 2d 1149 (1967), and a number of Michigan cases decided by the Michigan Supreme Court and this Court.
We note that in Wade, the United States Supreme Court held that, because of the established dangers of irreparable misidentification coupled with the inability to accurately reconstruct what happens at corporeal lineups, an accused in a federal prosecution is entitled to counsel at a “post-indictment” pretrial lineup in order to protect his right to meaningfully cross-examine the identifying witness at trial. People v Anderson, 389 Mich 155, 167; 205 NW2d 461 (1973). Thus, Wade was decided on due process grounds and without reference to the rules of evidence. Further, nowhere in Wade or its Michigan progeny is there an explicit adoption of the definition of “identification” proposed by defendant.
We do recognize, however, that the Michigan cases defendant cites all involve an actual identification by a witness, whether through a lineup, a showup, or other means, of a person after initially perceiving that person. In addition, the Michigan cases dealing with hearsay cited previously in this opinion also involve the same type of subsequent actual identification by a witness of a person after initially perceiving that person. Thus, while Wade and its progeny are not directly relevant to the issue here, we do acknowl edge that the two-step process of identification — an initial perception followed by a subsequent actual identification — described in these cases, and in the Michigan cases, is useful in analyzing the issue presented here.
F. PERCEPTION AND IDENTIFICATION
Here, Belanger may have “perceived” defendant as one of the three men who came into the Dairy Mart in the morning of January 12, 1995, and she perhaps may have “perceived” him as the person who made the purchase; the record is singularly unhelpful on the point of initial perception. We need not address this issue, however, for we do not find Belanger’s subsequent discussion about the race, age, height, weight, clothing, and style of haircut of the purchaser with Officer McDonald that same morning to be a statement of identification within the meaning of MRE 801(d)(1)(C). This discussion is not an “identification” within any interpretation of the rule that we have been able to unearth. Moreover, even if such a discussion did constitute a “statement of identification” under MRE 801(d)(1)(C), Officer McDonald did not testify about the content of the description (which he said he could not recall), but rather, in essence, testified that he had previously concluded that the description matched defendant. This certainly did not constitute testimony concerning a “statement of identification” by Belanger.
Thus, assuming arguendo that Belanger may have initially “perceived” defendant, there was no subsequent “identification” of him, whether through a lineup, a showup, or other means, sufficient to satisfy the requirements of MRE 801(d)(1)(C). This case, therefore, offers us the opportunity to stretch the rule to cover situations where an identifier/declarant provides only a description — if the “discussion” between Belanger and Officer McDonald actually contained a description — to a third party, and that third party concludes that this description covers the person initially perceived by the identifier/declarant. We decline the invitation because we do not believe this to be a reasonable interpretation of MRE 801(d)(1)(C). Such a description is simply not a statement of identification. We therefore conclude that the testimony of Officer McDonald in McDonald 2 should not have been admitted under MRE 801(d)(1)(C) and that the trial court abused its discretion in admitting such testimony.
G. HARMLESS ERROR
A nonconstitutional error in a criminal case does not warrant reversal unless there is a reasonable probability that the error affected the outcome of the trial. People v Sabin, 223 Mich App 530, 540 & n 2; 566 NW2d 677 (1997); People v Hubbard, 209 Mich App 234, 243; 530 NW2d 130 (1995).
The burglarized building in this case contained downstairs office space for two affiliated community organizations, Vine Ventures and the Vine Neighborhood Association, and residential apartments upstairs. Officer Charles Dahlinger testified that he received a radio call about a breaking and entering at that location at about 3:45 A.M. on January 12, 1995. Lynda Berge, the executive director of Vine Ventures who lived in one of the upstairs apartments, testified that, after being awakened at about 4:00 A.M. on January 12, 1995, she heard the alarm system sounding in the office space. Berge went downstairs and noticed that the monitor and keyboard of the computer that she used were gone. Amy Barcus, who was in the vicinity of the Vine Street building, testified that, at some point after 3:00 A.M. on a day in January 1995, she saw three people near the office. Barcus recalled one of them saying something like “Are you ready?” and then hearing a loud noise like a window breaking. Accordingly, the foregoing testimony placed three people at or near the location of the breaking and entering at the Vine Street building.
Officer Dahlinger testified that, after he arrived at the nearby park, he saw three males who “were the only individuals out that I had saw [sic],” apparently meaning that they were the only people, other than police officers, whom he saw in the area. Officer Dahlinger ordered the men to stop, which they did.
Officer Arrans testified that he took his police dog to the window that was the point of entry into the building. The dog started “tracking” from the window. As noted above, Officer Arrans found some dry gloves and hats along the path followed by the dog. Evidently because of the winter weather, Officer Arrans regarded it as “obvious that they had been discarded there within [a] relatively few minutes.” The dog’s tracking path came within about three feet of a dumpster. Eventually, the dog stopped tracking at the location where other officers had detained three men, including defendant, and the dog refused to continue tracking away from that spot.
As noted above, Officer McDonald testified that he had seen three males, one of whom was defendant, at the local Dairy Mart store earlier in the evening, at about 3:00 or 3:10 A.M. He saw the three men walk to a counter and make a purchase. Officer McDonald saw “Anderson” being handed a pair of gloves by one of the other two men but could not remember which of the other two — defendant or the other “Sykes”— handed the gloves to him. This testimony tends to link the three men, including defendant, to the gloves found near the location of the breaking and entering.
Officer Arrans also testified that he went to the dumpster and observed “the computer” on top of the garbage inside the dumpster. Officer Arrans also found three different types of footprints in the snow near the dumpster. A laboratory technician, Officer Gerald Luedecking, also testified that he found computer equipment and a crowbar in the dumpster. Three police officers indicated that shoes worn by defendant and the other two men matched footwear impressions in the snow.
The foregoing provides extremely strong evidence that the three men detained by the police had recently been in the area of the dumpster where the computer equipment was located and that no one else had been. This was also compelling evidence that one or more of these three men had thrown the computer equipment, obtained from the Vine Street building, in the dumpster. Accordingly, there was overwhelming evidence that defendant was with the other two men detained by the police when one or more of them broke and entered the building and removed the computer equipment.
Thus, the “identification” allegedly made by Belanger to Officer McDonald, or the lack of it, actually has little significance to the evidence in this case. The testimony from Barcus, in which she stated that one of the three individuals asked something like “Are you ready?” before the window was broken strongly indicated that at least two of them were planning to commit a breaking and entering. Completely disregarding the testimony with respect to the “identification,” it is extremely difficult to believe that defendant simply walked along with the other two men, then stopped and waited while they committed the breaking and entering and larceny and further walked along with them after the breaking and entering without having been a participant in the scheme. Thus, we conclude that the improper admission of the “identification” testimony was harmless error because there is no reasonable probability that its admission affected the outcome of defendant’s trial. Sabin, supra at 540 & n 2; Hubbard, supra at 243.
H. CONCLUSION
We conclude that the testimony of Officer McDonald in McDonald 2 was not testimony by a third-party witness concerning a statement of identification by Belanger under MRE 801(d)(1)(C) because it was not a statement that reflected the perceptions of a specific individual. Therefore, it was error for the trial court to allow McDonald’s testimony in McDonald 2. However, this error was harmless, as explained above.
IH. SUFFICIENCY OF THE EVIDENCE
Defendant’s remaining contention is that the evidence was insufficient to permit a rational trier of fact to find his guilt established beyond a reasonable doubt. People v Wolfe, 440 Mich 508, 515; 489 NW2d 748 (1992). We disagree. Even if the testimony regarding defendant’s identity had not been admitted, the remaining evidence overwhelmingly showed that defendant was part of a group of three men when one or more of them broke the window at the Vine Street building with a crow bar. They subsequently left the Vine Street building carrying the computer monitor and keyboard, which they hastily deposited in the dumpster along with the crow bar. Moreover, the police tracking dog followed a trail from the scene of the breaking and entering to the park where defendant was apprehended. When this evidence is viewed in a light most favorable to the prosecution, a rational trier of fact could find that defendant, acting either as a principal or an aider and abettor, broke and entered the Vine Street building and removed property with the intent to deprive the owner of it. MCL 750.110; MSA 28.305; MCL 750.360; MSA 28.592. See People v Adams, 202 Mich App 385, 390; 509 NW2d 530 (1993) (elements of breaking and entering are [1] the defendant broke in a building; [2] the defendant entered the building; [3] at the time of the breaking and entering, the defendant intended to commit a larceny or felony therein); People v Mumford, 171 Mich App 514, 517-518; 430 NW2d 770 (1988) (elements of larceny in a building are [1] an actual or constructive taking of goods or property; [2] a carrying away or asportation; [3] the carrying away must be with a felonious intent; [4] the goods or property must be the personal property of another; [5] the taking must be without the consent and against the will of the owner; and [6] the taking must occur within the confines of the building).
Affirmed.
The trial judge made the following statement to the prosecution:
But, in order to lay the foundation so that Mr. Charland can cross-examine the witness on the identifying statement, and this fit in with the — with the requirements of the Rule 801, and the hearsay exception, I think you ought to explore with her whether or not she can answer the questions about the identification and if she recalls it. Then the weight that’ll be given to the testimony is up to the jury. [Emphasis supplied.]
The record does not reflect any objection based upon the leading nature of the prosecution’s questions.
Officer McDonald’s exact words were: “The subject that was later identified by other officers as Talanda Sykes.” Officer McDonald then identified defendant in the courtroom.
But see People v Hallaway, 389 Mich 265, 275-276; 205 NW2d 451 (1973) (separate opinion of Brennan, J., joined by T. G. Kavanaugh, J.) in which Justice Brennan stated:
Hearsay is defined as an extra-judicial statement which is offered for the purpose of proving the truth of the thing said. While some writers have suggested that the hearsay rule need not be applied to the extra-judicial [i.e. out-of-court] statements of a declarant, who later testifies as a witness, this Court has not recognized such an exception to the hearsay rule. [Emphasis supplied.]
It can be contended that, in allowing these prior statements by a witness, Michigan had departed somewhat from the orthodox hearsay rule that prior statements of a witness were admissible only for impeachment or under a recognized exception to the hearsay rule. In any event, such a departure would have been in line with on-going attempts to change the rule itself. As Justice Boyle observed for the Court in Malone, supra at 375:
The proponents of change, among them Wigmore and Learned Hand, countered the orthodox view that substantive use was objecUonable because the prior statement when made was not under oath, subject to cross-examination, or in the presence of the trier of fact. They observed that the oath was no longer the principal safeguard of trustworthiness, that the interests of cross-examination were met by the declarant’s presence at trial, and that the trier’s advantage of observing the demeanor of the witness was also satisfied.
This Court stated:
A review of the record indicates that testimony of invs stigating officers was admitted concerning other witnesses’ prior identifications of defendant. MRE 801(d)(1)(C) provides that third-party testimony about another’s statement of identification, where the declarant has testified subject to cross-examination about the asserted identification, is not hearsay and is admissible as substantive evidence. [Malone, supra, 445 Mich 377.] The trial court did not abuse its discretion in admitting the testimony of the officers concerning the identifications made by other witnesses. [Whitfield, supra at 350-351.]
Presumably, this information was the “fairly specific information” to which Belanger referred in Belanger 1.
We do not view as probative the fact that Belanger’s description was oral; MRE 801(a) includes oral as well as. written statements, for obvious reasons. Nor do we view as probative the fact that Officer McDonald’s police report itself did not include the description given by Belanger to Officer McDonald. While a contemporaneous written record of that description might have enhanced the credibility of Officer McDonald’s testimony in McDonald 2, this does not affect the admissibility of the testimony itself.
People v Kachar, 400 Mch 78; 252 NW2d 807 (1977); People v Solomon, 391 Mich 767 (1974); People v Anderson, 389 Mch 155; 205 NW2d 461 (1973); People v Johnson, 202 Mch App 281; 508 NW2d 509 (1993); People v Lafayette, 138 Mch App 380; 360 NW2d 891 (1984); People v Lyles, 100 Mch App 232; 298 NW2d 713 (1980), vacated on other grounds 422 Mich 864 (1985); People v Stanton, 97 Mich App 453; 296 NW2d 70 (1980); People v Johnson, 58 Mich App 347; 227 NW2d 337 (1975).
The text of FRE 801(d)(1)(C) is virtually identical to the text of MRE 801(d)(1)(C).
See the definition of “identify” in Webster’s New World Dictionary (3rd College, 1988) at 669: “(2) to recognize as being or show to be the very same person or thing known, described, or claimed; fix the identity of [to identify biological specimens]." This definition also implies a two-step process of identification.
We do not hold that there can never be the admission of a statement of identification accompanying an actual physical identification. We note that in United States v Fritz, 580 F2d 370, 376 (CA 10, 1978), the Tenth Circuit Court of Appeals let stand as a statement of identification the comment by a police officer that he remembered the defendant from an earlier case. Here, however, the best that can be extracted from the record is that Belanger gave Officer McDonald “some fairly specific information” and that Belanger and Officer McDonald “discussed” such matters as the race, age, height, weight, clothing, and style of haircut of the three men who entered the Dairy Mart. There is nowhere in the record, from either Belanger or Officer McDonald, an actual physical description of defendant or, indeed, of anyone.
Although defendant in his brief sets out a harmless-error test applicable to some types of constitutional error, he has not argued that the admission of the “identification” testimony at issue constituted a constitutional error. Neither do we find a basis for concluding that the trial court’s violation of MRE 801(d)(1)(C) in admitting the “identification” testimony violated any constitutional right of defendant.
We recognize that there are some minor inconsistencies in accounts provided by the various police officers. For example, Officer McDonald said that he took one shoe from each suspect and compared them with the footprints by the dumpster, while Officer Arrans referred to pairs of shoes being compared with the footprints. However, we do not regard such minor inconsistencies as substantial. | [
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Per Curiam.
Plaintiff appeals as of right from the circuit court’s order granting summary disposition and awarding sanctions to defendants in this employment discrimination action brought under the Civil Rights Act (CRA), MCL 37.2101 et seq.; MSA 3.548(101) et seq. Plaintiff, a former chief assistant prosecuting attorney, alleged that by terminating her and not subsequently rehiring her for various positions, defendants discriminated against her on the basis of her gender and age, and retaliated against her for filing a complaint with the Equal Employment Opportunity Commission (eeoc). We affirm.
i
Plaintiff first argues that the circuit court improperly dismissed her claims of gender and age discrimination because genuine issues of material fact remained regarding whether defendants discriminated against her. We disagree.
A
Absent direct evidence of discrimination, a plaintiff may establish a prima facie case of employment discrimination by showing (1) that the plaintiff was a member of a protected class, (2) that an adverse employment action was taken against the plaintiff, (3) that the plaintiff was qualified for the position, and (4) that the plaintiff was replaced by one who was not a member of the protected class. Matras v Amoco Oil Co, 424 Mich 675, 683; 385 NW2d 586 (1986).
Plaintiff established that she was a member of protected classes on the basis of her age and gender and that she was not reappointed by Monroe County Prosecutor Edward E Swinkey after he won the 1992 election, defeating her former boss, William Frey. Plaintiff also established that she was replaced by a younger male and subsequently not rehired as chief assistant prosecutor and for various other positions. Although defendants dispute that plaintiff was qualified to be rehired as chief assistant prosecuting attorney, viewing the facts in a light most favorable to plaintiff, we conclude that plaintiff established that she was qualified for the position of chief assistant prosecutor on the basis of having held the position for seven years and the qualifications she testified to at deposition. However, regarding the remaining positions plaintiff applied for, department head in the office of the friend of the court and a position with the drain com mission, plaintiff presented no evidence of the qualifications required for those positions or that she met those qualifications. Accordingly, with regard to the friend of the court and drain commission positions, plaintiff failed to present the requisite evidence to establish a genuine issue of material fact that she was cis qualified as the persons who obtained the positions. Dubey v Stroh Brewery Co, 185 Mch App 561, 564-565; 462 NW2d 758 (1990).
We thus conclude that plaintiff presented a prima facie case of gender and age discrimination with respect to Swinkey’s not reappointing her to the chief assistant prosecutor position on December 31, 1992, find with respect to Swinkey’s failure to subsequently rehire her for that position.
B
The burden therefore shifted to defendant to articulate a legitimate, nondiscriminatory reason for not reappointing plaintiff and not subsequently rehiring her for the chief assistant prosecutor position. Dubey, supra at 563. It is undisputed that after Swinkey won the 1992 election, he did not reappoint four prosecuting attorneys who had served under Frey, his predecessor: plaintiff, another woman, and two men. In an affidavit submitted in support of his motion for summary disposition, Swinkey stated that he did not reappoint plaintiff because he wanted to hire a staff of committed and competent attorneys who would appropriately and adequately represent and further the policies and goals he promised to the electorate and that he had evaluated plaintiffs performance and decided she did not possess the requisite competence and ability. Swinkey presented evidence that, before the 1992 election, Frey came under investigation by the Attorney Grievance Commission (AGC). Swinkey presented evidence that several of the charges brought against Frey involved plaintiff, including that plaintiff and Frey represented adverse parties in a divorce action while plaintiff was chief assistant prosecutor; that plaintiff took part in Frey’s decision to fire Swinkey’s brother, an assistant prosecutor under Frey who had testified before the AGC during its investigation of Frey; and that plaintiff had been aware that Frey was monitoring Swinkey’s telephone conversations and had listened to tapes made by Frey.
Plaintiff argues that defendant discharged plaintiff “for being associated with his opponent in an election” and that such reason does not constitute a legitimate reason for its adverse employment actions but is, rather, unlawful political discrimination.
In response to plaintiff’s argument, Swinkey argued that, by statute, assistant prosecuting attorneys hold office at the pleasure of the prosecuting attorney. See MCL 49.35; MSA 5.795, which provides that “assistant prosecuting attorneys and other employees appointed by said prosecuting attorney under this act shall hold office during the pleasure of the prosecuting attorney.” Swinkey also argues that he could properly premise not reappointing plaintiff on plaintiff’s political affiliation. Under the circumstances presented here, we agree.
A dismissal or other adverse employment action toward a public employee based solely on the employee’s private political beliefs or affiliation presumptively violates the First Amendment. Branti v Finkel, 445 US 507, 515-517; 100 S Ct 1287; 63 L Ed 2d 574 (1980); Rutan v Republican Party of Illinois, 497 US 62, 65, 71-73, 75; 110 S Ct 2729; 111 L Ed 2d 52 (1990) (noting that promotions, transfers, and recalls after layoffs of lower-level public employees based on political affiliation or support impermissibly infringe their First Amendment rights). However, political affiliation may be an acceptable requirement for some types of employment. Branti, supra at 517-518; Hall v Tollett, 128 F3d 418, 422 (CA 6, 1997).
The term “political affiliation” includes not only partisan political interests and concerns, but also beliefs and commitments, Monks v Marlinga, 732 F Supp 749, 753, n 2 (ED Mich, 1990), aff’d 923 F2d 423 (CA 6, 1991). In the instant case, plaintiff and Swinkey are members of the same political party. The United States Court of Appeals for the Sixth Circuit in McCloud v Testa, 97 F3d 1536, 1553 (CA 6, 1996), held that First Amendment protection from adverse patronage employment actions extends to nonideologicai political factions of the same party. See also Monks, supra at 753, n 2.
To determine whether political considerations are appropriate in making personnel decisions for a certain position, courts must examine the inherent duties of that position and the duties that the new holder of that position will perform. Hall, supra at 423.
In Monks, supra, which also involved members of the same party, the plaintiffs were assistant prosecutors who brought suit against Macomb County’s prosecutor, alleging that the defendant terminated them because of their political affiliation, in violation of 42 USC 1983. The district court dismissed the plaintiffs’ political affiliation claims, concluding that political affiliation is pertinent to the effective performance of an assistant prosecutor’s duties:
The Court’s research has uncovered no precedent squarely addressing whether political affiliation is pertinent to the performance of the duties of an assistant county prosecutor appointed pursuant to Michigan law. The language of the relevant statutes, however, suggests that an assistant prosecutor’s position involves, at a minimum, “a modicum of policymaking responsibility, access to confidential information, or official communication.” Mariani-Giron v Acevedo Ruiz, 877 F2d 1114, 1117 (1st Cir 1989) (emphasis in original). Specifically, assistant prosecutors “perform any and all duties pertaining to the office of prosecuting attorney at such time or times as he may be required so to do by the prosecuting attorney and during the absence or disability of the prosecuting attorney . . . .” [Quoting MCL 49.42, 49.52; MSA 5.802, 5.812.] . . .
.... The mere fact that assistant prosecutors try cases under the direction of the prosecutor indicates that political loyalty is important to the office of assistant prosecutor. Every prosecuting attorney, as an elected official, necessarily possesses a political agenda. That agenda is manifested through the handling of criminal cases within such prosecutor’s county. Thus, the Court cannot escape the conclusion that political affiliation is pertinent to the effective performance of an assistant prosecutor’s duties. [Monks, supra at 753],
See also McCloud, supra at 1557, in which the court established four categories which attempt to capture the positions that could possibly fall into the Branti exception, including: Category One: positions specifically named in relevant federal, state, county or municipal law to which discretionary authority with respect to the enforcement of that law or the carrying out of some other policy of political concern is granted.
We conclude that under this line of authority, Swinkey could properly premise his decision not to reappoint plaintiff on plaintiffs political affiliation with his opponents. Swinkey thus articulated a legitimate, nondiscriminatory reason for not reappointing or subsequently rehiring plaintiff.
The burden then shifted to plaintiff to show by a preponderance of the evidence that the legitimate reason offered by defendants was a mere pretext for discrimination. Dubey, supra at 563. A plaintiff can establish that a defendant’s articulated legitimate, nondiscriminatory reasons are pretexts (1) by showing the reasons had no basis in fact, (2) if they have a basis in fact, by showing that they were not the actual factors motivating the decision, or (3) if they were factors, by showing that they were jointly insufficient to justify the decision. Id. at 565-566. Plaintiff did not present evidence sufficient to satisfy any of the three prongs. She did not present evidence that defendants’ reasons had no basis in fact or that they were insufficient to justify the decision not to reappoint or rehire. Plaintiff also failed to introduce evidence from which a factfinder could conclude that Swinkey’s articulated reasons were not the actual factors motivating the decisions.
We conclude that the circuit court properly dismissed plaintiffs claims of age and gender discrimination because plaintiff failed to present sufficient evidence to raise a triable factual issue that Swinkey’s articulated nondiscriminatory reasons for not reappointing her or subsequently rehiring her were pretexts. Grant v Michigan Osteopathic Medical Center, Inc, 172 Mich App 536, 540; 432 NW2d 313 (1988).
n
Plaintiff next argues that a genuine issue of material fact remained regarding whether defendants retaliated against her. We disagree.
The cra prohibits an employer from retaliating against an employee for making a charge, filing a complaint, testifying, assisting, or participating in an investigation, proceeding, or hearing under the act. MCL 37.2701; MSA 3.548(701). McLemore v Detroit Receiving Hosp, 196 Mich App 391, 395-396; 493 NW2d 441 (1992). Plaintiff’s retaliation claim fails because she presented no evidence from which a reasonable factfinder could infer that there was a causal connection between her eeoc complaint and defendants’ adverse employment actions. Kocenda v Detroit Edison Co, 139 Mich App 721, 726; 363 NW2d 20 (1984); see also Parnell v Stone, 793 F Supp 742, 746 (ED Mich, 1992), aff’d 12 F3d 213 (CA 6, 1993). The only evidence plaintiff presented was that Swinkey testified at deposition that he was not pleased that plaintiff had filed an eeoc complaint and that he had talked about the complaint to one other person. This was insufficient to establish a causal link between plaintiff’s eeoc complaint and the adverse employment actions. The circuit court properly dismissed plaintiffs retaliation claim for failing to establish that a genuine issue of material fact remained regarding whether defendants retaliated against her for filing her discrimination complaint. McLemore, supra at 395-396.
In light of our disposition, we need not address defendant Monroe County’s argument that it was not an employer within the meaning of the CRA. Monroe County was properly dismissed because plaintiff’s claims of discrimination and retaliation failed.
in
Finally, plaintiff argues that the circuit court erred in granting defendants’ motions for sanctions and costs pursuant to MCL 600.2591(3)(a); MSA 27A.2591(3)(a), MCR 2.114(F), and MCR 2.625(A)(2). A circuit court’s finding that a claim is frivolous is reviewed for clear error. LaRose Market, Inc v Sylvan Center, Inc, 209 Mich App 201, 210; 530 NW2d 505 (1995).
The trial court expressly found that the action was brought to harass and embarrass defendant Swinkey and with malice. While the conclusion was not compelled, we are unable to conclude that the circuit court’s finding was clearly erroneous.
Affirmed.
Plaintiff also presented evidence that her younger male replacement left after less than a year on the job and that another younger male was hired as chief assistant prosecutor.
Plaintiff also applied for a position with the probate court. However, at the hearing regarding defendants’ motion for summary disposition, plaintiff’s counsel withdrew plaintiff’s claim regarding that position.
Plaintiff has cited no authority in support of this argument.
In McCloud, several Franklin County auditor’s office employees, who were Republicans, brought suit when they were dismissed following the resignation of the Ohio Auditor and the appointment of a rival Republican to serve out the term. Id. at 1539. The plaintiffs alleged that their First Amendment rights to be free of patronage dismissals were violated, contravening 42 USC 1983. Id. at 1541.
Plaintiff alleged that Monroe County funded and assisted in operating the office of Monroe County prosecutor and assisted in staffing that office with assistant prosecutors, all of whom are Monroe County employees. | [
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Whttbeck, J.
i. basic facts and procedural history
Plaintiff the Herald Company, Inc. (Herald) filed a complaint against the city of Kalamazoo (the city) under the state Freedom of Information act (foia), MCL 15.231 et seq.; MSA 4.1801(1) et seq., seeking disclosure of documents that were compiled during an internal investigation into the theft of narcotics from an evidence room located within the Kalamazoo Department of Public Safety. The trial court, after reviewing the documents in camera, ordered, in accordance with an earlier decision and opinion in open court, the city to release certain documents to Herald. The trial court also allowed the city to redact certain documents. Finally, the trial court provided that the city would not have to release certain other documents. Herald appeals as of right, challenging the trial court’s decision with regard to some of the withheld documents. We affirm the decision of the trial court, but remand for reconsideration of whether certain documents that were withheld from disclosure under the “law enforcement proceedings” exemption of the foia should now be made available to Herald in light of the passage of time and changed circumstances since the trial court’s decision.
Herald discovered in 1993 that a large quantity of narcotics was apparently stolen from the evidence room at the Kalamazoo Department of Public Safety. Herald also learned that the city conducted an investigation into the matter and that a multicounty grand jury heard evidence related to the apparent theft, but that the grand jury did not issue any indictments in connection with this matter. In July 1995, Herald submitted an FOIA request to the city for documents related to the disappearance of narcotics from the evidence room. While the city disclosed some of the documents, it claimed that others were exempt from disclosure -under the foia. Herald filed this suit to seek release of the withheld documents.
n. THE LAW ENFORCEMENT EXEMPTION OF THE FOIA
A. THE “COULD” VERSUS “WOULD” DICHOTOMY
Herald argues that the trial court applied a flawed legal standard in determining whether certain documents were exempt from disclosure because their release would interfere with an ongoing investigation into the apparent theft of narcotics from the evidence room or because their release would reveal law enforcement techniques. Herald does not contest the trial court’s factual findings regarding this matter. We review questions of law de novo. Wayne Co v Britton Trust, 454 Mich 608, 614; 563 NW2d 674 (1997).
MCL 15.243(1)(b); MSA 4.1801(13)(1)(b) provides in pertinent part:
A public body may exempt from disclosure as a public record under this act:
* * *
(b) Investigating records compiled for law enforcement purposes, but only to the extent that disclosure as a public record would do any of the following:
(i) Interfere with law enforcement proceedings.
* * *
(v) Disclose law enforcement investigative techniques or procedures. [Emphasis added.]
In contrast, the federal FOIA allows exemption of documents that “could” reasonably be expected to interfere with law enforcement proceedings. See 5 USC 552(b)(7)(A). The trial court properly recognized in its July 2, 1996, oral opinion that the exemptions provided for law-enforcement-related matters by the Michigan FOIA are less expansive than similar provisions of the federal FOIA:
[T]his Court’s conclusion is that Michigan, by using the word, Would, has imposed a more restrictive standard on the exemption continued [sic] in MCL 15.243.
And, that’s the standard I will follow. And, the — the difference between the two words is significant.
However, Herald argues that the trial court later failed to follow the more restrictive Michigan standard when it excluded a particular item on the basis of a determination that its disclosure merely “may” have interfered with a law enforcement investigation:
1’11 insert parenthetically here, for any reviewing Court, with reference to the open investigation claim one item taken by itself might not appear to add or subtract much to whatever investigation is going on but it’s been my experience that investigations are like puzzles, ‘til you get all the pieces put together you do not know how they’re all going to fit. No puzzle is complete without all the pieces. And, if you don’t have the cover to the puzzle, and you find one piece of the puzzle somewhere it may not make much sense to you. But, if you have the cover and you know what the puzzle’s all about a little piece of information may help you, and may thwart the investigation.
First, the trial court appropriately reviewed the documents in accordance with Evening News Ass’n v City of Troy, 417 Mich 481; 339 NW2d 421 (1983). Evening News requires the trial court to review each section of the public record and determine whether, for the particular reasons given by the public body, disclosure of the section would interfere with law enforcement proceedings. Id. at 503-505. Here, the trial court properly reviewed in camera each document that the city claimed fell under the law enforcement exemptions at issue to determine whether the city’s asserted basis for withholding the document supported its exemption from disclosure.
Herald cites no instance where the trial court used words such as “could” or “may” in analyzing whether a particular document was exempt from disclosure under the law enforcement exemptions at issue. The trial court used the term “may” in discussing how one piece of information may not seem relevant to an ongoing investigation but nevertheless could actually be relevant. In context, the use of the word “may” in this portion of the trial court’s decision supports a conclusion that the trial court first determined whether a particular piece of information was at all relevant to the ongoing investigation. If it were, the trial court then applied the correct standard required by the Michigan foia. to determine whether the document was exempt from disclosure because it “would” interfere with law enforcement proceedings. Accordingly, the trial court applied the correct legal standard with regard to the law-enforcement-proceedings or investigative-techniques exemptions.
B. THE EXISTENCE OF AN OPEN INVESTIGATION
As we note above, the discovery of the disappearance of narcotics from the evidence room apparently occurred sometime in 1993. Herald made its initial FOIA request in this matter on July 3, 1995. Eventually, the city provided the trial court with 110 items that it claimed were exempt because they might be used in future investigations. The trial court ordered certain of these items to be released, but upheld the city’s claim of exemption with regard to the great bulk of these items.
Despite the fact that the grand jury that investigated, in pertinent part, the disappearance of narcotics from the evidence room of the Kalamazoo Department of Public Safety has adjourned, the city contends that Herald is attempting to persuade this Court to order the release of documents “which [Herald] knows or should know are at the core of an open, ongoing criminal investigation.” Apparently in support of this assertion, the city notes that the period of limitation for any theft of controlled substances has not ran and that there are several potential federal and state crimes for which the period of limitation has not yet run. See MCL 767.24; MSA 28.964. See also 18 USC 3282.
This position stretches the law enforcement exemption of the FOIA beyond any permissible limits. The Michigan Supreme Court most fully construed this exemption in Evening News, supra. That case involved foia requests by the Evening News Association to the city of Troy relating to the identifies of two officers involved in a killing that occurred in Troy in 1979 and incident reports related to that killing. Evening News, supra at 487. The trial court upheld the denial of disclosure, and this Court affirmed. Id. at 491. The Michigan Supreme Court reversed, holding, inter alia, that the trial court erred in its “generic determination” that the defendants, the city of Troy and its police chief, had met their statutory burden to sustain their claim of exemption where it was only alleged in conclusory fashion that disclosure would “ ‘[interfere with law enforcement proceedings’ ” or “ ‘would indeed have a chilling effect on the investigation.’ ” Id. at 517. The Court outlined a three-step procedure to be followed by Michigan trial courts in evaluating the rejection of an FOIA request:
1. The court should receive a complete particularized justification as set forth in the six rules above (Part IC);[ ] or
2. the court should conduct a hearing in camera based on de novo review to determine whether complete particularized justification pursuant to the six rules exists; or
3. the court can consider “allowing plaintiff’s counsel to have access to the contested documents in camera under special agreement ‘whenever possible.’ ” [Evening News, supra at 516 (citations omitted).]
Here, the able trial court, carefully and with extensive deliberation, followed the first two of these procedural options: consistent with the first option, he required the city to file a particularized justification consisting of an index of allegedly exempt documents and a supporting affidavit and, consistent with the second option, it also undertook an in camera review of the disputed documents. On the basis of this review, the trial court found in its July 2, 1996, oral opinion that an ongoing investigation was underway:
And, I’m back to the original point that I’m satisfied from the affidavit of Inspector Grace, and what I’ve seen in all these documents I’m making reference to, that there still is an open investigation which is a [sic] objectively good faith investigation to determine, if possible, the method, and who, and when, and where, and how all these items disappeared.
While we see no basis whatever to question the accuracy or legal sufficiency of this finding, it was made at the latest on July 3, 1996. It is now over a year and a half later, over 2V2 years from the date of Herald’s initial foia request and over four years since the discovery of the apparent theft of narcotics from the evidence room. The city acknowledges that the grand jury has adjourned and returned no indictments relating to these thefts. We see no basis, in state or federal cases construing the Michigan FOIA or its federal counterpart, for the proposition that an “open” investigation can be construed to continue until the expiration of the applicable period of limitation for criminal prosecution without active, ongoing law enforcement investigation. Indeed, in Evening News, supra at 484, the requested documents related to a homicide. There was at the time of the Evening News decision, and there is now, no statute of limitations for the crime of murder. See MCL 767.24; MSA 28.964. Conceivably, under the city’s theory, a public body could withhold documents related to a homicide investigation in perpetuity. In this regard, we emphasize that we narrowly construe the exemptions from disclosure provided by the FOIA. Booth Newspapers, Inc v Univ of Michigan Bd of Regents, 444 Mich 211, 231-232; 507 NW2d 422 (1993); Newark Morning Ledger Co v Saginaw Co Sheriff, 204 Mich App 215, 218; 514 NW2d 213 (1994).
Accordingly, although we find no error on the part of the trial court, we remand to the trial court for the limited purpose of a factual determination regarding the current existence of any “open, ongoing criminal investigation” that the city asserts is underway that would be interfered with by disclosure of the relevant documents. If the trial court again finds, using one or more of the appropriate options under the Evening News three-step procedure, the current existence of such an investigation, the city may continue to withhold documents previously exempted from disclosure under the law-enforcement-proceedings exemption of the foia if their release would still interfere with law enforcement proceedings. However, if the trial court finds that the investigation has concluded or that the release of certain documents would not interfere with the investigation at its current stage, the city must disclose the appropriate documents. In this regard, as noted in Evening News, supra at 516-517, Judge J. Skelly Wright’s reference in Ray v Turner, 190 US App DC 290, 304, n 10; 587 F2d 1187 (1978) (Wright, J., concurring), to the words of James Madison is of particular relevance:
“ ‘Knowledge will forever govern ignorance, and a people who mean to be their own governors, must arm themselves with the power knowledge gives. A popular government without popular information or the means of acquiring it, is but a prologue to a farce or a tragedy or perhaps both.’ ”
in. THE UNWARRANTED INVASION OF PRIVACY EXCEPTION OF THE FOIA
Herald argues that the trial court applied an incorrect legal standard in determining that certain documents were exempt from disclosure under the FOIA exemption provided by MCL 15.243(1)(b)(iii); MSA 4.1801(13)(1)(b)(iii) because their disclosure would result in an unwarranted invasion of privacy. Again, Herald does not contest the trial court’s factual findings.
Herald initially contends that the trial court erred because it did not look at the threshold question whether the information it requested was of a personal nature. Subsection 13(1)(b)(iii), upon which the trial court relied, does not contain the explicit language of subsection 13(1)(a), which requires that the information be “of a personal nature.” Nevertheless, in Pennington v Washtenaw Co Sheriff, 125 Mich App 556, 566; 336 NW2d 828 (1983), this Court indicated that appropriate nondisclosure of requested information on the basis of subsection 13(1)(b)(iii) is limited to “ ‘intimate details of a highly personal nature.’ ” (Citation omitted.) In any event, the trial court did as a threshold matter examine the nature of the requested documents. The trial court stated that, if it determined that the information was of a private nature, then it would determine if disclosure of the information was nevertheless warranted.
Herald also contends that the trial court used a balancing test to determine whether to release the documents although the Michigan Supreme Court has not sanctioned such a balancing test. The participating justices in State Employees Ass’n v Dep’t of Management & Budget, 428 Mich 104; 404 NW2d 606 (1987), split, with no majority in agreement, with regard to the test that should be applied to determine if disclosure would result in an unwarranted invasion of privacy. In that case, the three justices who joined in the plurality opinion concluded that a balancing test should not be used. Id. at 126 (Cavanagh, J., joined by Levin and Archer, JJ.) These justices were of the view that a trial court must determine case by case whether the common-law principles of invasion of privacy apply. Id. at 123-126. The three other justices, in separate opinions, argued that the trial court should apply a balancing test in which the invasion of privacy is balanced against the purpose for which the information is sought. Id. at 128 (Brickley, J.), 129 (Boyle, J.), 130-131 (Riley, C.J.).
In light of State Employees, supra, this Court has previously applied in alternative analyses both a balancing test and the common-law privacy test. Detroit Free Press, Inc v Oakland Co Sheriff, 164 Mich App 656, 668-669; 418 NW2d 124 (1987). The trial court also used this approach, noting that courts have applied different standards to the privacy exemption. The trial court articulated the balancing test of weighing the invasion of privacy against the purpose of the disclosure. See id. at 661-662. The trial court also articulated the common-law standard of invasion of privacy, that one who publicizes a matter concerning the private life of another is subject to liability if the publicized matter would be highly offensive to a reasonable person. See id. at 663-664. The trial court appropriately applied both standards. Thus, we find that the trial court did not apply an incorrect legal standard.
IV. SEPARATION OF EXEMPT FROM NONEXEMPT MATERIALS UNDER THE FOIA
Herald argues that the city violated the FOIA by not separating exempt from nonexempt materials. However, Herald failed to preserve this issue for review because Herald did not raise it in the trial court. We need not review issues raised for the first time on appeal although we may do so to prevent manifest injustice. Pittsburgh Tube Co v Tri-Bend Inc, 185 Mich App 581, 590; 463 NW2d 161 (1990). We perceive no manifest injustice from our refusal to address this unpreserved issue. From our review of the record, the city did actually separate and disclose materials that it classified as nonexempt under the FOIA when Herald first requested documents related to the apparent evidence room thefts. Thus, this situation is different from that in Evening News, supra at 512-513, where the defendants made no attempt whatever to separate admittedly nonexempt materials from materials that the defendants claimed were exempt from disclosure.
V. PROCEDURAL safeguards of THE FOIA
Herald argues that the trial court and the city violated the FOIA by failing to follow procedural safeguards of the FOIA. We find no error requiring reversal.
Herald asserts that the city’s initial response failed to meet the statutory requirements of the FOIA because it did not identify with particularity the documents it was withholding and the exemptions that the city claimed applied to those documents. While the city’s initial response may not have complied with the requirements of the FOIA, the city complied with the trial court’s order to file a bill of particulars identifying each individual document and explaining how each claimed exemption applied to each document. Such a bill of particulars complies with the procedural requirements of the FOIA. Evening News, supra at 503. Thus, no error requiring reversal occurred.
Herald also argues that the trial court erred in not allowing it or its counsel access to the city’s bill of particulars under the third step of the three-step procedure of Evening News, id. at 516, that trial courts are to use in deciding FOIA cases. However, as discussed above, the Michigan Supreme Court did not mandate application of each step of the three-step procedure. Rather, as appropriate in a particular case, a trial court may follow one or more of the three steps. Id. Indeed, the use of step three, allowing a plaintiff’s counsel to have access in camera to contested documents, should be strictly limited. Post-Newsweek Stations, Michigan, Inc v Detroit, 179 Mich App 331, 337; 445 NW2d 529 (1989). We find no error in the trial court’s using only steps one and two of the procedure set forth in Evening News, supra at 516.
Herald also claims that the trial court erred because it did not expedite this matter as required by the foia. However, this issue is moot. In light of our conclusion that Herald has not established any error in the substance of the trial court’s decision, it would be impossible for us to fashion an appropriate remedy for any arguably undue delay by the trial court in reaching that decision. Michigan Nat’l Bank v St Paul Fire & Marine Ins Co, 223 Mich App 19, 21; 566 NW2d 7 (1997). Nevertheless, six months was not an unreasonable amount of time for the trial court to take to issue a decision given the volume of documents and the complexity of the issues in this case.
Affirmed, but remanded for further proceedings consistent with part n of this opinion. No costs, a question of public significance being involved. We do not retain jurisdiction.
During oral argument, the city’s counsel asserted that the city had received indications of a continuing interest in this matter from other governmental investigatory agencies. Because this assertion is unsupported by the record, we do not consider it. See, e.g., Hawkins v Murphy, 222 Mich App 664, 670; 565 NW2d 674 (1997) (review is limited to the record on appeal).
The six rules are:
1. The burden of proof is on the party claiming exemption from disclosure. MCL 15.240(1); MSA 4.1801(10)(1).
2. Exemptions must be interpreted narrowly. Vaughn v Rosen, 157 US App DC 340, 343; 484 F2d 820 (1973).
3. “[T]he public body shall separate the exempt and nonexempt material and make the nonexempt material available for examination and copying.” MCL 15.244(1); MSA 4.1801(14)(1); Vaughn v Rosen, 157 US App DC 345.
4. “[Detailed affidavits describing the matters withheld” must be supplied by the agency. Ray v Turner, 190 US App DC 290, 317; 587 F2d 1187 (1978).
5. Justification of exemption must be more than “conclusory,” i.e., simple repetition of statutory language. A bill of particulars is in order. Justification must indicate factually how a particular document, or category of documents, interferes with law enforcement proceedings. Campbell v Dep’t of Health & Human Services, 221 US App DC 1, 4-6, 10-11; 682 F2d 256 (1982); Vaughn v Rosen, 157 US App DC 347.
6. The mere showing of a direct relationship between records sought and an investigation is inadequate. Campbell v Dep’t of Health & Human Services, 221 US App DC 8-9. [Evening News, supra at 503.]
Evening News, supra, indicated by the use of the conjunctive “or” that a trial court need not use all three of these alternatives in every case before concluding that an FOIA request is properly denied. See Evening News, supra at 516.
In Evening News, supra at 507, the Michigan Supreme Court gave short shrift of the trial court’s conclusory finding that revealing the names of witnesses “ ‘could conceivably result in conflicting statements and further hamper the investigation; also piecemeal, partial statements in the press could, conceivably, inflame the public further than it has already been inflamed.’ ” The Court observed:
The “could conceivably result”, etc., clause is speculative and conclusory. It certainly is no foundation to justify an exemption. The “could, conceivably, inflame the public” clause not only is speculation, but smacks of public censorship, which would not appear to be the purpose of [the] foia. There may possibly be occasions where public safety requires minimal delay of announcements, but not for eight weeks and not on such a speculative basis. [Id. at 507-508; emphasis added.]
If the Court were troubled by an eight-week delay, one can only speculate how much stronger a negative reaction it would have to a delay of over ZVt years from the date a party filed its initial foia request.
We do note that in Evening News, supra at 517, the defendants conceded that the investigation was closed. The city has obviously made no such concession here.
As stated in Docal v Bennsinger, 543 F Supp 38, 44, n 12 (MD Pa, 1981), considerations that have prevented disclosure in connection with an ongoing criminal investigation have included fears of revealing
(1) evidence, (2) witnesses, (3) prospective testimony, (4) the reliance placed by the government upon the evidence, (5) the transactions being investigated, (6) the direction of the investigation, (7) government strategy, (8) confidential informants, (9) the scope and limits of the government’s investigation, (10) prospective new defendants, (11) materials protected by the Jencks Act [18 USC 3500], (12) attorney work product, (13) the methods of surveillance, (14) subjects of surveillance. Kanter v Internal Revenue Service, 433 F Supp 812, 822, n 18 (ND Ill, 1977). See, New England Medical Center Hospital v NLRB, 548 F2d 377 (1st Cir, 1976); National Public Radio v Bell, 431 F Supp 509 (D DC, 1977); Electric-flex Co v NLRB, 412 F Supp 698 (ND Ill, 1976).
Subsection 13(1)(a) provides a general foia exemption (regardless of whether the requested record is related to law enforcement purposes) for “[Information of a personal nature where the public disclosure of the information would constitute a clearly unwarranted invasion of an individual’s privacy.” Subsection 13(1)(b)(iii) provides an foia exemption for “[Investigating records compiled for law enforcement purposes” to the extent that disclosure as a public record would “[c]onstitute an unwarranted invasion of personal privacy.”
Because the same result is reached under either the balancing test or the common-law privacy test, as in Detroit Free Press, supra, we need not conclude which test is appropriate. | [
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Young, Jr., J.
In this tax dispute respondent Department of Treasury appeals as of right from the opinion and judgment of the Michigan Tax Tribunal in favor of petitioner Michigan Bell Telephone Company canceling a Department of Treasury assessment and ordering a refund of use taxes paid by Michigan Bell during tax years 1989 through 1992. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
This dispute was submitted to the Tax Tribunal on stipulated facts. Michigan Bell provides telecommunication services that are subject to the Michigan use tax under MCL 205.93a(a); MSA 7.555(3a)(a). Michi gan Bell purchased telecommunication equipment that it claimed was exempt from sales tax pursuant to MCL 205.54a(k); MSA 7.525(k) and from use tax pursuant to MCL 205.9400; MSA 7.555(4)(t).
The equipment at issue is exchange equipment and station apparatus through which telephone calls flow. Generally, Michigan Bell’s equipment is exempt from both sales and use taxes because Michigan Bell’s customers pay either sales or use tax on their calls flowing through Michigan Bell’s equipment. However, telephone service provided by coin-operated phones and telephone service provided to schools, hospitals, and certain charitable institutions are not subject to use tax:. To put the issue in simple terms, application of the use tax exemption to Michigan Bell’s communications equipment depends on whether the underlying service provided is itself taxable.
Michigan Bell paid $4,623,932 in use taxes during tax years 1989 through 1992 on its purchase of telecommunication switching and exchange equipment. Michigan Bell sought a refund of these taxes, con tending that the subject equipment should have been fully exempt from the use tax even though some of the calls routed through the equipment were tax-exempt because the customer was considered to be an exempt user (e.g., hospitals, schools, etc.). It was stipulated that eighty-five percent of the calls flowing through Michigan Bell’s equipment were made by customers subject to use tax and fifteen percent who were tax-exempt.
The $4,623,932 represents the use tax that the Department of Treasury levied on Michigan Bell’s equipment, which amount corresponds to the percentage of calls flowing through the equipment placed by users who did not pay use tax on the calls made. As such, the Department of Treasury did not disallow the entire use tax exemption Michigan Bell sought, but merely apportioned the exemption, applying it only to the portion of the equipment’s value attributable to the processing of taxable (nonexempt) calls.
Michigan Bell also challenged a separate Department of Treasury assessment in the amount of $2,751,754. Where applicable, Michigan Bell bills to its nonexempt customers an appropriate amount for the use tax assessed on the calls placed by those customers. When the amount billed is determined to be uncollectable, Michigan Bell reduces by a like amount the use tax it pays on its monthly return to the Department of Treasury. The net effect of this practice is that Michigan Bell avoids payment of the use tax attributable to the taxable services that were not paid by its uncollectable customers. The Department of Treasury disallowed this deduction and made the challenged assessment, contending that Michigan Bell was liable for the entire amount of the use tax levied on nonexempt calls, notwithstanding Michigan Bell’s inability to collect the tax from the consumer. For the purposes of the litigation before the Tax Tribunal, the parties stipulated that Michigan Bell had exercised reasonable business care in attempting to collect the applicable use tax.
The parties submitted two issues for determination by the Tax Tribunal:
(1) Can the Department of Treasury apportion Michigan Bell’s communication equipment exemption?
(2) Can the Department of Treasury require Michigan Bell to pay a customer’s use tax when the customer fails to pay for the use tax as well as for the underlying service?
The Tax Tribunal, relying on Michigan Allied Dairy Ass’n v State Bd of Tax Administration, 302 Mich 643; 5 NW2d 516 (1942), answered the first question by ruling that the Department of Treasury could not apportion the use tax exemption on Michigan Bell’s communication equipment because “the equipment is used from the very outset and constantly thereafter for exempt purposes and the exempt use is substantial.’’ Regarding the second question, the Tax Tribunal disallowed the assessment for uncollected customer use taxes on the ground that the “ultimate burden of paying use tax does not fall on [Michigan Bell], Rather, the burden falls on [Michigan Bell’s] customer.”
n. ANALYSIS
A. APPORTIONMENT
In deciding the apportionment question, the Tax Tribunal was required to construe § 4(t) of the Use Tax Act, 1937 PA 94, MCL 205.91 et seq.-, MSA 7.555(1) et seq. During the tax periods at issue in this appeal, § 4(t), MCL 205.94(f); MSA 7.555(4)(t), read as follows:
The [use] tax levied does not apply to:
The purchase of machinery and equipment for use or consumption in the rendition of a service, the use or consumption of which is taxable under section 3a(a) [MCL 205.93a(a); MSA 7.555(3a)(a)] except that this exception is limited to the tangible personal property located on the premises of the subscriber and the necessary exchange equipment.
The parties do not cite and our research has not revealed any published decision directly addressing this use tax exemption applicable to equipment used in rendering communication services. Absent fraud, this Court’s review of the Tax Tribunal's decision is limited to determining whether the tribunal erred in applying the law or in adopting a wrong legal principle. Saginaw General Hosp v Saginaw, 208 Mich App 595, 598; 528 NW2d 805 (1995). We conclude that the Tax Tribunal correctly determined that Michigan Bell was entitled to an exemption from the use tax.
The primary goal of statutory interpretation is to ascertain and give effect to the intent of the Legislature in enacting a provision. Farrington v Total Petroleum, Inc, 442 Mich 201, 212; 501 NW2d 76 (1993). Statutory language should be construed reasonably, keeping in mind the purpose of the statute. Lorencz v Ford Motor Co, 439 Mich 370, 377; 483 NW2d 844 (1992). The first criterion in determining intent is the specific language of the statute. House Speaker v State Administrative Bd, 441 Mich 547, 567; 495 NW2d 539 (1993). If the statutory language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. Barr v Mount Brighton Inc, 215 Mich App 512, 517; 546 NW2d 273 (1996).
The rule to be applied when construing tax exemptions was well summarized by Justice COOLEY as follows:
“[I]t is a well-settled principle that, when a specific privilege or exemption is claimed under a statute, charter or act of incorporation, it is to be construed strictly against the property owner and in favor of the public. This principle applies with peculiar force to a claim of exemption from taxation. Exemptions are never presumed, the burden is on a claimant to establish clearly his right to exemption, and an alleged grant of exemption will be strictly construed and cannot be made out by inference or implication but must be beyond reasonable doubt. In other words, since taxation is tlie rule, and exemption the exception, the intention to make an exemption ought to be expressed in clear and unambiguous terms; it cannot be taken to have been intended when the language of the statute on which it depends is doubtful or uncertain; and the burden of establishing it is upon him who claims it. Moreover, if an exemption is found to exist, it must not be enlarged by construction, since the reasonable presumption is that the State has granted in express terms all it intended to grant at all, and that unless the privilege is limited to the very terms of the statute the favor would be extended beyond what was meant.” [Detroit v Detroit Commercial College, 322 Mich 142, 149; 33 NW2d 737 (1948), quoting 2 Cooley, Taxation (4th ed), § 672, p 1403. ]
There is no dispute that the purchase of the equipment in question, but for any exemption afforded by § 4(t), is subject to use tax. Under § 4(t), the use tax exemption applies if the equipment is deployed to provide a service that is taxable under MCL 205.93a(a); MSA 7.555(3a)(a). The only other conditions of eligibility are that the equipment be necessary exchange equipment or be tangible personal property and located on the premises of the subscriber. MCL 205.94(t); MSA 7.555(4)(t). Again, the applicability of these conditions to the equipment in question is not challenged. On the face of the exemption, it does not appear that the Legislature intended the use tax exemption to be apportioned, such that the exemption applies only to that portion of the equipment’s value attributable to the provision of services actually consumed or used that are themselves subject to the use tax.
Our construction of the exemption is bolstered by the fact that when the Legislature has intended to apportion tax on the basis of underlying use, it has clearly and expressly so indicated. By way of example, MCL 205.52(2); MSA 7.522(2) requires, for sales tax purposes, that a retailer keep separate accounts for taxable and nontaxable transactions. Indeed, in Michigan Allied Dairy, supra, our Supreme Court was confronted with a similar mixed use and appor tionment issue. In declining to apportion the sales and use tax exemptions applicable to industrial processing and agricultural production equipment where that property was subject to mixed use, the Court held:
Where an article has more than one use, one or more (but not all) of which are within the agricultural producing or industrial processing exemptions, the [Legislature could have provided that the portion of the value of the article representing its nonexempt use should bear the tax, but it has not done so. We have repeatedly held that the scope of the tax laws may not be extended by implication. [Id. at 650.]
Were we to conclude that apportionment is appropriate under MCL 205.94(t); MSA 7.555(4)(t), despite the absence of authorizing language, we would run afoul of our Supreme Court’s admonition that we should neither contract nor expand the scope of a tax exemption by construing it according to implication. Michigan Allied Dairy, supra at 650. A construction permitting apportionment clearly would be contrary to the plain language of the statute.
The Department of Treasury concedes that in Michigan Allied Dairy, supra, the Supreme Court held that, despite a partial nonexempt use (delivery) of the equipment in question (milk bottles and cans), the equipment was totally exempt from the general sales and use taxes. Nevertheless, the Department of Treasury, citing Kress v Dep’t of Revenue, 322 Mich 590; 34 NW2d 501 (1948), argues that the concept of apportionment has been recognized by the Supreme Court. In Kress, the plaintiff sought a use tax exemption under the industrial processing exemption, which exempted from the use tax “[property sold to a buyer for consumption or use in industrial processing or agricultural producing.” MCL 205.94(g); MSA 7.555(4)(g).
The plaintiff in Kress rented water softener units to its customers for both residential use and industrial/commercial use. The Supreme Court held that, under § 4(g), only those units distributed to industrial/commercial users were eligible for a use tax exemption. Although the Supreme Court referenced a specific percentage of units that were eligible for the exemption, we do not read Kress as authorizing an “apportionment.” Rather, Kress merely recognized that only some portion of the total number of units were subject to exempt use.
The most salient and distinguishing fact of Kress is that the water softeners at issue were individual units, never subject to a unified industrial process. Rather, they were distributed independently into two user channels, one exempt and one nonexempt. The central importance of the character of the equipment and its distribution to the manner in which the Supreme Court resolved the use tax question in Kress was made clear when on remand the Supreme Court reconsidered the case the following year. Kress v Dept of Revenue, 326 Mich 15; 39 NW2d 235 (1949) (Kress II). Rather than repudiate Michigan Allied Dairy, Kress II focused on the different character of the means by which the equipment was utilized in that case: “We think the Dairy Case distinguishable in that there each of the units involved was from the very outset and constantly thereafter used in industrial processing as well as otherwise.” Id. at 18. It was on that basis that the Court in Kress II rejected the plaintiff’s argument that, like the plaintiff in Michigan Allied Dairy, it was entitled to a full exemption because all the water softener units were recycled and eventually put to exempt commercial use.
In sum, we find no basis in the holdings of Kress or Kress II for concluding that, in the absence of explicit authorizing statutory language, apportionment is appropriate under § 4(t) when the equipment involved is put to mixed use, but in a unified process. Therefore, we conclude that Michigan Bell is entitled to a full use tax exemption with respect to its purchase of the communications equipment in question.
B. MICHIGAN BELL’S LIABILITY FOR UNCOLLECTED CUSTOMER USE TAXES
The second issue decided by the Tax Tribunal was whether Michigan Bell may be held hable for the uncollected (and apparently uncollectable) use taxes that are owed by its customers but who failed to pay them. We conclude that the Tax Tribunal did not err in finding that Michigan BeU could not be required to pay its customers’ use taxes where Michigan Bell had used reasonable business care in trying to collect them.
In order to resolve this issue, we must examine various interrelated provisions of the Use Tax Act. Section 7, MCL 205.97; MSA 7.555(7), of the core taxing provision of the act, states:
Each consumer storing, using or otherwise consuming in this state tangible personal property or services purchased for or subsequently converted to such purpose or purposes shall be liable for the tax imposed by this act, and such liability shall not be extinguished until the tax has been paid to the department. The payment to the department of the fax, interest and any penalty assessed by the department shall relieve the seller, who sold the property or services with regard to the storing, use or other consumption on which the tax was paid from the payment of the amount of the tax which he may be required under this act to collect from the purchaser.
However, § 5(a) of the act, MCL 205.95(a); MSA 7.555(5)(a), requires each seller to collect the “tax imposed by this act from the consumer,” and, in addition, § 9, MCL 205.99; MSA 7.555(9), imposes certain tax liabilities for the seller’s failure to do so:
In case any seller who is required or authorized to collect the tax fails to do so, he shall be liable personally for such amount as he failed to collect together with penalty and interest thereon. In such case, the department shall have power to make an assessment against such seller, based upon any information in, or which shall come into its possession.
Finally, § 16 of the Use Tax Act, MCL 205.106; MSA 7.555(16), provides for criminal sanctions for failure to comply either with the collection requirements or with any other provisions of the act:
Any seller who fails, neglects or refuses to collect the tax as required by this act, or fails, neglects or refuses to comply with the provisions of this act, or excepting as expressly authorized pursuant to this act, refunds, remits or rebates to a consumer, either directly or indirectly and by whatsoever means, all or any part of the tax levied by this act, or makes in any form of advertising, verbal or otherwise, any statements which might imply he is absorbing the tax or paying the tax for the consumer by an adjustment of prices or at a price including the tax, or in any other manner whatsoever, shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined not less than $100.00 nor more than $500.00, and upon conviction for a second or subsequent offense shall be fined not less than $500.00 nor more than $5,000.00, or imprisoned in the county jail not more than 1 year, or by both such fine and imprisonment in the discretion of the court.
The question that this case presents is whether, under the Use Tax Act, the seller’s collection duties become transformed into primary responsibility for taxes imposed on the use or consumption of tangible personal property that remain unpaid by the consumer. Stated otherwise, this second issue requires us to determine exactly how extensive is the collection liability of the seller under the act.
The Department of Treasury interprets § 9 of the act as permitting it to assess the use tax against the seller if the consumer does not pay the tax. It notes that the language of § 9 does not relieve the seller of responsibility for collecting the use tax from consumers once the seller has exercised “reasonable business care” in attempting to do so. Instead, the Department of Treasury argues, the statute provides that if the seller fails to collect the tax, the seller is personally hable for the amount that remains uncollected, plus penalty and interest. The Department of Treasury thus interprets the Use Tax Act to mean that a seller must achieve a one-hundred percent success rate in its collection efforts or become its customers’ use-tax payment guarantor.
Contrary to the Department of Treasury’s argument, however, § 7 suggests that there is no joint tax liability» Rather, § 7 specifically provides that the appropriate use taxpayer is the consumer. Indeed, the Supreme Court in Lockwood v Comm’r of Revenue, 357 Mich 517, 527; 98 NW2d 753 (1959), recognized that, although the seher is required to cohect the use tax on behalf of the state, the ultimate burden of paying the tax is on the consumer or purchaser, which is the party exercising the privilege of use, storage, or consumption. We believe that this is an important concept, because it represents one of the primary distinctions between the use tax and the sales tax, the legal incidence of which falls upon the seller only in the case of the sales tax. MCL 205.52; MSA 7.522. As the Court in Lockwood, supra at 527, explained:
As a practical proposition [the use tax and the sales tax] are assessed on different privileges, and the legal incidence of the tax falls in one case on the retailer and in the other on the user, storer or consumer. The fact that the seller of the goods designed for use, storage or consumption in Michigan is required by the statute to collect on behalf of the State the amount due from the purchaser does not alter the situation. The use tax is not imposed on such seller, but, rather, on the party exercising the privilege of use, storage, or consumption, as the case may be. One may be charged with the duty of collecting a tax on behalf of gov emment although the ultimate burden of such tax does not rest on him.
To say the least, the statutory provisions at issue appear to conflict such that a literal reading of each could lead reasonable minds to differ regarding their meaning in relation to one another. This being the case, it was appropriate for the Tax Tribunal to engage in construction of the statute. Yaldo v North Pointe Ins Co, 217 Mich App 617, 620-621; 552 NW2d 657 (1996). It is a well-accepted rule of statutory construction that the terms of statutory provisions having a common purpose should be read in pari materia. Jennings v Southwood, 446 Mich 125, 136; 521 NW2d 230 (1994). The object of the rule requiring the reading of such provisions in pari materia is to give effect to the legislative purpose as found in statutes on a particular subject. Id. at 137. Conflicting provisions of a statute must be read together to produce an harmonious whole and to reconcile any inconsistencies wherever possible. Gross v General Motors Corp, 448 Mich 147, 164; 528 NW2d 707 (1995); Weems v Chrysler Corp, 448 Mich 679, 699-700; 533 NW2d 287 (1995).
We believe that the Tax Tribunal properly construed the Use Tax Act as requiring an element of intent, or fault, on the part of the seller in its effort to collect the use tax from its customers before it can be subject to either tax liability under § 9 or criminal penalties under § 16. Unquestionably, § 16 requires some conduct on the part of the seller amounting to more than a mere lack of success in collecting use taxes from its consumers. Rather, § 16 imposes criminal penalties only on a seller who “fails, neglects or refuses to collect the tax as required by this act.” (Emphasis added). Although “fails” can be read with or without connoting fault, its conjunction with the terms “neglect” and “refuses” makes clear that the Legislature intended to require fault as a basis for criminal liability.
We acknowledge that § 9, which imposes tax liability on a seller that is required to collect the use tax but “fails to do so,” can be read as imposing absolute liability on a seller for its mere inability to collect the use taxes owed by its customers. However, we believe that, in light of § 16, and, most important, the fact that § 7 imposes the actual tax obligation only on the consumer, the legislative scheme of these several provisions suggests that the Legislature intended the seller to suffer the imposition of the tax obligation or criminal penalties only upon some showing that the seller’s inability to collect the tax was fault-based. Finally, our interpretation is supported by the familiar principle that ambiguities in a taxing statute are to be resolved in favor of the taxpayer. Michigan Bell Telephone Co v Dep’t of Treasury, 445 Mich 470, 477; 518 NW2d 808 (1994).
In this case, the Department of Treasury has admitted that Michigan Bell did everything commercially reasonable to try to collect the use tax in question on behalf of the state. Given our construction of the act, the record fails to support any basis for imposing tax liability on Michigan Bell simply because it was unsuccessful in its effort to collect the tax from its customers. Therefore, we find no error in the Tax Tri-., bunal’s resolution of this issue.
Affirmed.
MCL 205.93a(a); MSA 7.555(3a)(a), during the tax years in question, read as follows:
The use or consumption of the following services shall be taxed under this act in the same manner as tangible personal property is taxed under this act:
(a) Intrastate telephone, telegraph, leased wire and other similar communications, including local telephone exchange and long distance telephone service which both originates and terminates in Michigan, and telegraph, private line and teletypewriter service between places in Michigan, but excluding telephone service by coin-operated installations, switchboards, concentrator-identifiers, interoffice circuitry and their accessories for telephone answering service and directory advertising proceeds.
The applicability of the sales tax exemption is not at issue in this case.
See text, post at 206.
See MCL 205.93a(a); MSA 7.555(3a)(a) and MCL 205.94(i); MSA 7.555(4)(i).
The Tax Tribunal did suggest that apportionment was appropriate in certain cases.
We also review the Tax Tribunal’s findings of fact and determine whether they are supported by competent, material, and substantial evidence on the whole record. Saginaw General Hosp, supra. However, such review is unnecessary in this case because, as stated previously, the Tax Tribunal based its decision on stipulated facts.
In Michigan Allied Dairy, supra at 649-650, the machinery at issue involved milk bottles and cans that were used in the pasteurization processing of milk, an exempt use. Following the completion of the pasteurization, the bottles and cans were sealed and used to deliver the milk to consumers, a nonexempt use.
This was the same tax provision at issue in Michigan Allied Dairy.
The Department of Treasury points out that the Kress Court considered a concurrent House resolution purporting to construe the general Sales Tax Act, enacted earlier, to exclude from sales tax the “sale of anything used exclusively in the manufacturing, assembling, producing, preparing, or wrapping, crating, and/or otherwise preparing for delivery any tangible personal property to be sold.” Kress, supra at 593, quoting House Concurrent Resolution No. 98, July 18, 1933 (emphasis added). Noting that the Sales Tax Act, MCL 205.51 et seq.; MSA 7.521 et seq., and the Use Tax Act had a “peculiar intercorrelation,” the Court stated: “We may consider that in passing the use tax act, the [Legislature had in mind the same matters contained in the above quoted concurrent resolution.” Kress, supra at 593.
In adopting the so-called intent expressed in the resolution, the Kress Court cited Boyer-Campbell Co v Fry, 271 Mich 282; 260 NW 165 (1935), which in turn noted that “Legislative resolutions are not law, although they are entitled to respectful consideration.” Boyer-Campbell, supra at 296. Whatever the validity of this proposition in 1935 or 1948, our Supreme Court has since made clear that post hoc legislative pronouncements carry no weight when construing statutes. See Presque Isle Twp School Dist No 8 Bd of Ed v Presque Isle Co Bd of Ed, 364 Mich 605, 612; 111 NW2d 853 (1961) (“ ‘[A] legislative body is not permitted under any circumstances to declare what its intention was on a former occasion so as to affect past transactions.’ ” Quoting North Trust Co v Snyder, 113 Wis 516, 530; 89 NW 460 [1902]). Therefore, even assuming that the Kress Court attempted to engage in true “apportionment,” we have strong reason to question the extent to which the particular analysis in Kress should be extended beyond the unique facts it addressed.
Perhaps in partial recognition that the Kress cases provide no legal support for its apportionment argument, the Department of Treasury has sought to bring this case within the actual holding of those cases. It suggests that Michigan Bell has engaged in two separate undertakings akin to that recognized in the Kress cases: “[t]he providing of a service which is taxable, and the providing of a service which is exempt.” We disagree with this characterization. As in the case of the milk cans and bottles in Michigan Allied Dairy, the communications equipment in this case involves one set of equipment, employed in a unified process, serving mixed exempt and nonexempt uses. See also Minnaert v Dep’t of Revenue, 366 Mich 117, 123; 113 NW2d 868 (1962). There is no basis in this stipulated record to conclude that Michigan Bell, in using its equipment to provide telephone service to the public, can segregate or otherwise direct exempt and nonexempt use by its customers at the point telephone service is rendered or consumed.
The Department of Treasury briefly argues in the alternative that if apportionment under § 4(t) is not permitted, then Michigan Bell is not entitled to any tax exemption on the purchase of its communications equipment because that equipment is not used exclusively for rendering services that are subject to the use tax. We reject the Department of Treasury’s argument for two reasons. First, it is not supported by a plain reading of § 4(t). Second, such an argument is clearly contrary to the Supreme Court’s decision in Michigan Allied Dairy. Because the exempt use in this case is so substantial, we do not reach or address the issue whether § 4(t) can be applied at all in cases where the exempt use of qualifying equipment is insubstantial or de minimis. We merely hold that apportionment is not expressly authorized by § 4(t).
In light of our resolution of this issue, we need not address Michigan Bell’s Commerce Clause and Equal Protection Clause arguments. | [
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Weaver, J.
Defendant was charged with receiving or concealing stolen firearms or ammunition and possession of a firearm during the commission of a felony (felony-firearm). Defendant brought a motion to dismiss the felony-firearm charge on double jeopardy grounds. The trial court granted the motion, holding that it would violate the Double Jeopardy Clause if he were prosecuted under both statutes. Trial was stayed while the prosecutor appealed. The Court of Appeals issued an opinion affirming the trial court’s ruling. We reverse and remand.
The sole question before us is whether it is a violation of the United States and Michigan Constitutions’ prohibition against double jeopardy for defendant to be prosecuted for felony-firearm when the predicate felony is receiving or concealing a stolen firearm or ammunition.
There are various protections flowing from the double jeopardy guarantee of the United States and Michigan Constitutions: it precludes a second prosecution for the same offense after acquittal or conviction, and also protects against multiple punishments for the same offense. It is this last protection — protection against multiple punishments for the same offense — with which we are concerned today. This protection is designed to ensure that courts confine their sentences to the limits established by the Legislature. People v Sturgis, 427 Mich 392; 397 NW2d 783 (1986).
Where multiple punishment is involved, the Double Jeopardy Clause acts as a restraint on the prosecutor and the Courts, not the Legislature. Brown v Ohio, 432 US 161; 97 S Ct 2221; 53 L Ed 2d 187 (1977). Where “a legislature specifically authorizes cumulative punishment under two statutes, regardless of whether those two statutes proscribe the ‘same’ conduct under Blockburger, a court’s task of statutory construction is at an end and the prosecutor may seek and the trial court or jury may impose cumulative punishment under such statutes in a single trial.” Missouri v Hunter, 459 US 359, 368; 103 S Ct 673; 74 L Ed 2d 535 (1983). Where the issue is one of multiple punishment rather than successive trials, the double jeopardy analysis is whether there is a clear indication of legislative intent to impose multiple punishment for the same offense. If so, there is no double jeopardy violation. People v Robideau, 419 Mich 458, 469; 355 NW2d 592 (1984). 1 Gillespie, Michigan Criminal Law & Procedure (2d ed), § 102, p 285.
Thus, we need only determine whether the Legislature has authorized multiple punishments. To do so, we look to the subject, language, and history of the statutes. Robideau, supra at 486.
MCL 750.535b; MSA 28.803(2) regulates both stolen firearms and stolen ammunition, and punishes those who receive, conceal, store, barter, sell, dispose of, pledge, or accept as security for a loan either of these items. MCL 750.227b; MSA 28.424(2) creates a separate felony for those who possess a firearm while committing a felony.
MCL 750.227b; MSA 28.424(2) specifically excludes violations of four felonies — § 223 (unlawful sale of a firearm), § 227 (carrying a concealed weapon), § 227a (unlawful possession of a firearm by a licensee) and § 230 (alteration of identifying marks on a firearm). The Court of Appeals effectively held that this was not an exclusive list, and held that “mere possession of a weapon, without more, cannot serve as the predicate for a felony-firearm charge.” 220 Mich App 439, 443; 559 NW2d 439 (1996). We disagree with this reading of the felony-firearm statute. The Court of Appeals erred in reading in an exception that was not included in the statute by the Legislature.
This Court has previously discussed the history and legislative intent of the felony-firearm legislation. In People v Morton, 423 Mich 650, 656; 377 NW2d 798 (1985), this Court said that “it [is] clear that the Legislature intended, with only a few narrow exceptions, that every felony committed by a person possessing a firearm result in a felony-firearm conviction.” In People v Sturgis, supra at 407, we noted that “[t]he language and structure of the statute thus contain no indication that the Legislature intended that a felony-firearm offense was a sentence-enhancement statute which precluded the charging and conviction of separate offenses.” In Sturgis, supra at 407-408, this Court also concluded that “[t]he legislative history of the statute also reflects a commitment to reach all but the excepted felonies.”
In 1990, the Legislature amended the felony-firearm statute. It added to the list of excepted felonies § 223 (unlawful sale of a firearm) and § 230 (alteration of identifying marks on a firearm). 1990 PA 321. We find it significant that in this amendment the Legislature did not add the felony at question here today, § 535b, receiving or concealing stolen firearms or ammunition, to the list of excepted felonies. Nor did it add any concluding catch-all phrase such as to trigger an ejusdem generis analysis. Rather, the Legislature simply listed the four exceptions without using any language such as “or other similar statute” that would give a court an open door to expand the number of exceptions. The fact that such language was not included must be given meaning. That meaning is that the list of four exceptions is exclusive. We reject the reasoning of People v Walker, 167 Mich App 377, 385; 422 NW2d 8 (1988), that “the Legislature’s intent was to preclude a possession offense from serving as the underlying felony for felony-firearm.” This extrapolation from the list of exclusions in the felony-firearm statute is too broad, and reaches beyond the Legislature’s explicit provisions. We overrule People v Walker, supra, and its progeny to the extent that they are in conflict with our opinion today. We conclude that the Legislature’s intent in drafting the felony-firearm statute was to provide for an additional felony charge and sentence whenever a person possessing a firearm committed a felony other than those four explicitly enumerated in the felony-firearm statute.
We reverse the decision of the Court of Appeals, reinstate the charge against defendant, and remand for further proceedings.
Mallett, C.J., and Brickley, Boyle, and Taylor, JJ., concurred with Weaver, J.
MCL 750.535b; MSA 28.803(2).
MCL 750.227b; MSA 28.424(2).
220 Mich App 439; 559 NW2d 105 (1996).
US Const, Am V provides, in pertinent part: “nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb”; Const 1963, art 1, § 15 provides: “No person shall be subject for the same offense to be twice put in jeopardy.”
5 The Blockburger test says that “The applicable rule is that, where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one is whether each provision requires proof of an additional fact which the other does not.” Blockburger v United States, 284 US 299, 304; 52 S Ct 180; 76 L Ed 306 (1932).
MCL 750.535b(2); MSA 28.803(2)(2) states, in pertinent part:
A person who receives, conceals, stores, barters, sells, disposes of, pledges, or accepts as security for a loan a stolen firearm or stolen ammunition, knowing that the firearm or ammunition was stolen, is guilty of a felony, punishable by imprisonment for not more than 10 years or by a fine of not more than $5,000.00, or both.
The felony firearm statute, MCL 750.227b(l); MSA 28.424(2)(1) provides:
A person who carries or has in his or her possession a firearm when he or she commits or attempts to commit a felony, except a violation of section 223 [unlawful sale of a firearm], section 227 [carrying a concealed weapon], 227a [unlawful possession of a firearm by a licensee] or 230 [alteration of identifying marks on a firearm], is guilty of a felony, and shall be imprisoned for 2 years. | [
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Weaver, J.
We granted leave in this case to determine whether a hearsay statement, made approximately ten hours after an event, was properly admitted under MRE 803(2) as an excited utterance. Further, we address whether defendant was denied the effective assistance of counsel because his attorney was charged with a felony pending in the same county. We hold that the hearsay statement was admissible as an excited utterance and that defendant was not denied effective assistance of counsel. The defendant’s conviction and sentence are affirmed.
i
The complainant was a sixteen-year-old high school sophomore when he joined the gym where he met defendant. Complainant joined the gym to improve his chances of making the varsity baseball team. Defendant was a thirty-one-year-old bodybuilder, from whom others, including complainant, sought weightlifting advice. At some point, defendant and complainant exchanged telephone numbers. Complainant testified that, at that time, defendant had told him that he “expected” complainant to call him. Shortly thereafter, in January 1991, complainant telephoned the defendant to invite him out for a movie and pizza. Defendant picked the complainant up and then picked up defendant’s roommate to join them. Defendant testified that he and his roommate had been in a homosexual relationship for two years. That evening, the conversation revolved around baseball and bodybuilding. Complainant testified that he did not understand why defendant’s roommate had come along.
One week later, complainant called defendant to ask if defendant wanted to go bowling. Defendant suggested they watch a movie at defendant’s house instead. Defendant again picked complainant up and they returned to defendant’s house. Complainant testified that while watching the movie defendant said that he found complainant interesting and asked complainant if he was open-minded. Sometime later defendant asked him, “What do you think about getting your dick sucked?” Complainant responded, “I’m not funny, if that’s what you mean.”
Soon thereafter, two women stopped by for directions to a party. Defendant led them by car to the party with complainant in the front passenger seat. Complainant testified to a growing uneasiness. In response to this uneasiness, defendant said he would take complainant home. Defendant briefly went into the party and came out with a man whom he drove to the store for more beer. When complainant attempted to move to the backseat of the car, defendant said to him, “You don’t have to take the backseat for nobody.” After going to the store, the three went back to the party, where defendant and complainant stayed for a brief time. After leaving the party, defendant took complainant back to defendant’s house.
Upon return to defendant’s house, complainant testified that defendant offered to involve him in a business venture if complainant would allow defendant to perform fellatio on him. Complainant testified that he told defendant that the proposition was “sick.” Complainant testified that at this point the defendant got very angry, that the defendant would not allow him to leave, and that the options offered by defendant became increasingly violent. Complainant testified further that defendant told him to leave and then would not allow him to go, and that complainant became increasingly frightened. Defendant then promised to take complainant home after defendant smoked a joint, but instead of taking him home at that point, defendant offered complainant other choices. Defendant gave the complainant the choice between fighting defendant, who outsized complainant by eight inches and one hundred pounds, or allowing defendant to perform fellatio on him. When complainant asked to use the telephone, defendant said, “You’re just going to call your mom .... I’ll just beat her up. I’ll beat up whoever comes over, or I’ll just call my friends to beat them up.” Complainant testified that defendant then pushed him and hit him in the chest and leg.
At that point, a group of people came to the door and defendant told complainant to be quiet because they had guns. After the people left, complainant testified that defendant gave him another option: either let defendant perform fellatio or he would give him over to the people who were coming by again later and who were “sicker” than defendant and into “s & M.” Complainant testified that defendant then held scissors to his neck to force compliance with defendant’s request. When complainant assented, defendant first told him that he was not gay and would take complainant home. But minutes later, defendant reiterated his threat. Again, complainant assented and defendant told him that he would stop on complainant’s request. Defendant then performed fellatio on complainant. After about one minute, and at complainant’s request, defendant stopped.
Although defendant testified that there was a conversation regarding open-mindedness and his homosexuality, he denied that he became violent or forced complainant to allow him to perform fellatio. He denied any sexual contact with complainant.
The defendant then drove the complainant home at approximately 1:45 in the morning. Complainant’s mother testified that she came to the door when complainant returned home because he was having a difficult time getting the door unlocked. She inquired if anything was wrong and testified that his response was, “Oh, mom, leave me alone.” She observed that complainant seemed tearful and emotional. Without answering his mother’s second inquiry, complainant abruptly left the room and took a bath with the water running continually for approximately one horn1. The mother observed complainant pacing the floor and punching his hand into his fist. She testified further that at approximately 5:30 A.M., complainant was uncharacteristically sleeping on the livingroom couch, though his bedroom was adjacent to the livingroom, and that his eyelashes appeared wet.
At 11 o’clock the next morning complainant awoke. He testified that he asked his father for a weightlifting bench, and that his father responded, “Maybe later.” Later he asked his mother, who said she would buy him a bench for his birthday in June. His mother testified that at that moment complainant stated, “Mom, I can’t wait that long,” and started crying and rocking back and forth. She further testified that when she asked him what was wrong, he responded, “Oh, mom, I had to be sucked off last night before I can [sic] even come home.”
It is this statement to which defense counsel objected. However, the court ruled that the statement was admissible as an excited utterance. The jury ultimately convicted defendant of first-degree criminal sexual conduct. Defendant appealed, challenging among other issues, the admission of the hearsay statement. Further, defendant claimed that he was denied his Sixth Amendment right to counsel, because, at the time of trial, his attorney had been charged with a criminal offense in the same county.
The Court of Appeals affirmed the conviction for different reasons. It held that the statement did not qualify as an excited utterance, but that the admission of the statement was harmless error because it was cumulative, given complainant’s testimony. With respect to the effective assistance of counsel argument, the Court found no conflict of interest because the judge and the prosecutor involved in counsel’s case were not the same as those in defendant’s case. This Court granted leave limited to these issues. 454 Mich 873 (1997).
n
We generally review a trial court’s determination of evidentiary issues for an abuse of discretion. People v Adair, 452 Mich 473, 482; 550 NW2d 505 (1996), citing People v Perkins, 424 Mich 302, 308; 379 NW2d 390 (1986). Close questions arising from the trial court’s exercise of discretion on an evidentiary issue should not be reversed simply because the reviewing court would have ruled differently. People v Bahoda, 448 Mich 261, 289; 531 NW2d 659 (1995), quoting People v Golochowicz, 413 Mich 298, 322; 319 NW2d 518 (1982). The trial court’s decision on a close evidentiary question ordinarily cannot be an abuse of discretion. Id.
MRE 803(2) defines an excited utterance as “[a] statement relating to a startling event or condition made while the declarant was under the stress of excitement caused by the event or condition.” The rule allows hearsay testimony that would otherwise be excluded because it is perceived that a person who is still under the “sway of excitement precipitated by an external startling event will not have the reflective capacity essential for fabrication so that any utterance will be spontaneous and trustworthy.” 5 Weinstein, Evidence (2d ed), § 803.04[1], p 803-19.
In People v Straight, 430 Mich 418, 424; 424 NW2d 257 (1988), this Court cited the two primary requirements for excited utterances: 1) that there be a startling event, and 2) that the resulting statement be made while under the excitement caused by the event. Straight clarified People v Gee, 406 Mich 279, 282; 278 NW2d 304 (1979), which had split the second requirement into two inquiries: whether the statement was made before there was time to contrive and misrepresent, and whether it related to the circumstances of the startling occasion. Straight explained:
Properly understood, Gee's requirement that the statement must “be made before there has been time to contrive and misrepresent” is simply a reformulation of the inquiry as to whether the statement was made when the witness was still under the influence of an overwhelming emotional condition. [Id., p 425.]
This explanation clarified that it is the lack of capacity to fabricate, not the lack of time to fabricate, that is the focus of the excited utterance rule. The question is not strictly one of time, but of the possibility for conscious reflection. 5 Weinstein, supra, § 803.04[4], p 803-23.
In this case, the Court of Appeals found that, although the complainant was still under the stress of the assault, “the statement did not qualify as an excited utterance because . . . the statement was made after there was sufficient time to permit reflective thought.” Unpublished opinion per curiam, decided July 11, 1995 (Docket No. 148757). This reasoning is flawed. Though the time that passes between the event and the statement is an important factor to be considered in determining whether the declarant was still under the stress of the event when the statement was made, it is not dispositive. It is necessary to consider whether there was a plausible explanation for the delay. Gee, p 283. Unlike MRE 803(1), the present sense impression exception, which requires that the “statement describing or explaining an event or condition [be] made while the declarant was perceiving the event or condition, or immediately thereafter,” there is no express time limit for excited utterances. “Physical factors, such as shock, unconsciousness, or pain, may prolong the period in which the risk of fabrication is reduced to an acceptable minimum.” 5 Weinstein, supra, § 803.04[4], p 803-24. The trial court’s determination whether the declarant was still under the stress of the event is given wide discretion. McCormick, Evidence (3d ed), § 297, p 857.
There can be no question that the sexual assault in this case was a startling event. The question is whether the complainant was still under the stress of the assault when he stated to his mother ten hours later, “I had to be sucked off last night before I can [sic] even come home.” The circumstances preceding and surrounding the statement convince us that the statement was made while the complainant was still under the overwhelming influence of the assault and, therefore, that the statement was reliable and admissible.
We find that the complainant’s actions upon arriving home were extraordinary. When he arrived home at approximately 1:45 A.M., he took an hour-long bath and let the water run that entire time. Afterward, he paced the living room and his mother observed him punching his fist into his hand. At approximately 5:30 A.M., complainant uncharacteristically slept on the couch, though his bedroom adjoined the living room. His mother observed that he appeared to have been crying. At approximately 11 o’clock the next morning, the complainant asked his father and mother separately for a weight bench. His father said maybe, and later, when his mother said yes, but not for three months, complainant broke into tears. When his mother asked what was wrong, complainant made the statement in question. We agree with the trial court that these circumstances describe a continuing level of stress arising from the assault that precluded any possibility of fabrication.
The defense cites not only the time lapse between the event and the statement, but also the fact that the statement was made in response to questioning. Like the question of elapsed time, whether a statement made in response to questioning should be excluded under MRE 803(2) depends on the circumstances of the questioning and whether it appears that the statement was the result of reflective thought. McCormick, supra, p 857. In Straight, the Court found that the stress caused by the parents’ suggestive questioning of their four year old immediately after the child’s pelvic area had been examined for evidence of molestation may well have supplanted any residual stress from an alleged assault. Id., p 426. Though acknowledging that the questioning was not grounds for automatic exclusion, the Court could not be sure that the stress of the alleged assault was continuing. Unlike the questioning in Straight, the mother’s inquiries of the complainant when he arrived home and the following morning were not suggestive, nor can the two inquiries be characterized as persistent and insistent. Contrasted with the questioning in Straight during which the four-year-old complainant’s parents repeatedly asked the child to tell them what happened until she answered, there is nothing about the mother’s inquiries in the present case that undermines confidence in the conclusion that the complainant’s state ment resulted from the stress of the assault and not from the “stress” of his mother’s inquiries. Further, the lapse of time between the event and the statement was shorter in this case than it was in Straight, and we find no evidence suggesting that the stress arising from the assault had abated.
One final rationale for excluding the statement is that complainant’s request for a weight bench might appear self-serving or at least to exemplify rational thought. However, from our review of the circumstances surrounding the statement, fabrication seems a remote possibility. It appears that the “dam simply broke” after complainant realized that in order to keep weightlifting, he would have to go to the gym where he would be faced with seeing defendant. Thus, we hold that the trial court did not abuse its discretion by admitting the statement because we find that statement was admissible as an excited utterance.
Even if we were to agree with the Court of Appeals that it was error to admit complainant’s statement, we would affirm the Court of Appeals ruling that the error was harmless. The Court of Appeals concluded that the error was harmless because the statement was cumulative to the victim’s own in-court testimony. We clarify that the fact that the statement was cumulative, standing alone, does not automatically result in a finding of harmless error. Harmless error review requires reversal only if the error is prejudi cial. People v Mateo, 453 Mich 203, 215; 551 NW2d 891 (1996) (summarizing the articulations of harmful error in MCL 769.26; MSA 28.1096, MCR 2.613[A], and MRE 103). The inquiry into prejudice “focuses on the nature of the error and assesses its effect in light of the weight and strength of the untainted evidence.” Id. The reviewing court must consider the entire record. Id., p 217. Although the statement in question is certainly alarming in content, we find no prejudice requiring reversal in light of the entire record. Complainant had already testified regarding the escalating threats and forced fellatio. Further, the mother’s testimony, which was replete with evidence of the complainant’s distress upon his arrival home, corroborated complainant’s testimony. Nor can we say, given the entire testimony of the mother and complainant, that the defendant’s theory, his denial of the threats and forced fellatio, was eroded by admission of the statement.
in
Defendant argues that he was denied the effective assistance of counsel in violation of his Sixth Amendment rights because his attorney was charged with a felony pending in the same county. Defendant asks that we presume a conflict of interest exists whenever an attorney is being prosecuted in the same county as a criminal defendant whom he represents. We decline to create such a rule and hold instead that in order to demonstrate that a conflict of interest has violated his Sixth Amendment rights, a defendant “must establish that an actual conflict of interest adversely affected his lawyer’s performance.” Cuyler v Sullivan, 446 US 335, 350; 100 S Ct 1708; 64 L Ed 2d 333 (1980).
In People v Pickens, 446 Mich 298; 521 NW2d 797 (1994), this Court adopted the ineffective assistance of counsel standard articulated by Strickland v Washington, 466 US 668; 104 S Ct 2052; 80 L Ed 2d 674 (1984). To prove a claim of ineffective assistance of counsel under Pickens and Strickland, a defendant must show that counsel’s performance fell below an objective standard of reasonableness and that the deficient performance prejudiced the defense so as to deny defendant a fair trial. Strickland, pp 688-689. In dicta however, Strickland cited Cuyler's rule for cases involving ineffective assistance of counsel claims premised on an actual conflict, of interest. Id., p 692. Cuyler calls for a heightened standard in conflict of interest claims. In circumstances involving a conflict of interest, Cuyler stated that “counsel breaches the duty of loyalty, perhaps the most basic of counsel’s duties. Moreover, it is difficult to measure the precise effect on the defense of representation corrupted by conflicting interests.” Strickland, p 692. This heightened standard is not a rule of prejudice per se; rather, “[prejudice is presumed only if the defendant demonstrates that counsel ‘actively represented conflicting interests’ and that ‘an actual conflict of interest adversely affected his lawyer’s performance.’ ” Id., quoting Cuyler, supra, pp 348-350.
Cuyler involved an alleged conflict of interest arising from an attorney’s representation of codefendants. Defendant argues that a potential conflict of interest between an attorney and his client is more serious than the representation of codefendants and, therefore, claims that a rule of prejudice per se is necessary. However, we find our reasoning in People v Pubrat, 451 Mich 589; 548 NW2d 595 (1996), persuasive in this case. In Pubrat, we held that an attorney’s suspension from the practice of law does not create a presumption of ineffective assistance of counsel. We reasoned, “[a]ttomeys may be suspended from the practice of law for a multitude of reasons . . . [and] there is no necessary correlation between an attorney’s suspension and competency . . . Id., p 598. Similarly, we find that there is no automatic correlation between an attorney’s theoretical self-interest and an ability to loyally serve a defendant. As in Pubrat, we recognize the potential for an attorney’s self-interest to conflict with the representation of a defendant and that in such a case a finding of ineffective assistance of counsel would be warranted. If a convicted defendant believes that his attorney’s representation was below an objective standard of reasonableness, the appropriate procedure is to seek a Ginther hearing. People v Ginther, 390 Mich 436; 212 NW2d 922 (1973).
We find that a rule per se is inappropriate and favor the reasoned approach of Cuyler, supra. In this case, defendant has cited no evidence to suggest that defense counsel actively lessened his defense as a result of his pending felony charge, nor do we find evidence of an actual conflict of interest on the record. To the contrary, defense counsel vigorously pursued his objections and presented a strong case.
iv
The defendant’s conviction and sentence are affirmed.
Mallett, C.J., and Boyle and Taylor JJ., concurred with Weaver, J.
Instead of treating physical conditions as a factor to consider in excited utterance analysis, the dissent would create a new rule which makes physical factors such as shock, unconsciousness, or pain a prerequisite for the admission of an excited utterance after a lapse of time.
See Straight, supra at 421, n 1.
In Straight, the statement was not made until approximately one month after the incident. Id. at 421.
We acknowledge that this statement is nearing the outer limits of admissibility under the excited utterance exception, and trial courts should be so cautioned.
The dissent relies on Straight, supra, to support its conclusion that admission of the statement was not harmless error. In Straight, Justice Boyle concluded that, when viewed as a “one-to-one credibility contest between the child and defendant,” this Court could not conclude that the parents’ testimony regarding the complainant’s statements did not influence the jury’s decision. Id. at 427-428. However, Straight is distinguishable because it involved the testimony of a five-year-old complainant, while the present case involves the testimony of a sixteen-year-old complainant whom the defense had full opportunity to cross-examine. Thus, in light of all the evidence, we conclude that the admission of the statement did not tip the scales in favor of a guilty verdict.
Const 1963, art 1, § 20 provides no greater protection than the Sixth Amendment of the federal constitution. People v Pickens, 446 Mich 298, 326; 521 NW2d 797 (1994). | [
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Kelly, J.
We granted leave in this case to decide whether the Whistleblowers’ Protection Act shields an employee who was discharged under the erroneous perception that he reported a violation of law. We conclude that the statute does not protect such an employee.
i
Defendant Dowell Schlumberger Incorporated (DSl) hired the plaintiff on June 4, 1989, as a field engineer trainee. It promoted him to field engineer on November 11, 1990.
On April 6, 1992, the Michigan Department of Transportation, acting on a tip, cited DSl for carrying hydrochloric acid in a trailer not properly certified to carry it. Over the next week, plaintiff’s supervisor, Joseph Shurell, sought the identity of the person who had reported the violation to moot. On April 13, 1992, Shurell called plaintiff to his office, questioned him about who reported the violation, and fired him.
Plaintiff filed the present action under the Whistleblowers’ Protection Act (wpa). In his complaint, he alleged that Shurell discharged him because Shurell believed that plaintiff had reported violations of the law to MDOT. Among other things, the wpa makes it illegal for an employer to retaliate against an employee because the employee has reported a violation of the law.
When defendant moved to dismiss the case under MCR 2.116(C)(10), Midland Circuit Court Judge Paul J. Clulo granted the motion, holding that the WPA did not protect plaintiff. He later denied plaintiffs motion for reconsideration. Plaintiff then appealed to the Court of Appeals, which affirmed. 214 Mich App 111; 542 NW2d 310 (1995). We granted plaintiffs application for leave to appeal. 454 Mich 906 (1997).
n
This Court is asked to review the trial court’s grant of defendant’s motion for summary disposition under MCR 2.116(C)(10). In deciding a motion under sub-rule (C)(10), the trial court views affidavits and other documentary evidence in the light most favorable to the nonmoving party. Shallal v Catholic Social Services of Wayne Co, 455 Mich 604, 610; 566 NW2d 571 (1997). Our review is de novo. Groncki v Detroit Edison Co, 453 Mich 644, 649; 557 NW2d 289 (1996). See Weymers v Khera, 454 Mich 639; 563 NW2d 647 (1997).
m
A
Plaintiff sues under § 2 of the Whistleblowers’ Protection Act. It provides:
An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action. [MCL 15.362; MSA 17.428(2).]
When construing a statute, we begin by recognizing that “[w]here the legislative intent is clearly expressed, it is entitled to the utmost respect.” People v Waterman, 137 Mich App 429, 432-433; 358 NW2d 602 (1984). We explained the process recently;
The cardinal rule of all statutory construction is to identify and give effect to the intent of the Legislature. The first step in discerning intent is to examine the language of the statute in question. We read the language according to its ordinary and generally accepted meaning. Judicial construction is authorized only where it lends itself to more than one interpretation. We also consider that remedial statutes, such as the Whistleblowers’ Protection Act, are to be liberally construed, favoring the persons the Legislature intended to benefit. [Shallol, supra at 611 (citations omitted).]
B
Plaintiff alleges that he was fired because dsi believed it was he who blew the whistle. Accordingly, plaintiff is a “perceived whistleblower” and points to an opinion of this Court providing protection under the Michigan Handicappers’ Civil Rights Act to those who are “perceived to be handicapped.” Sanchez v Lagoudakis, 440 Mich 496, 503; 486 NW2d 657 (1992). Plaintiff argues that, because the employer has undertaken the action the statute appears to forbid, firing an employee believed to have reported a violation, the act should punish the employer. Plaintiffs argu merit requires us to examine the Whistleblowers’ Protection Act.
Recently, we recognized that a plaintiff must establish three elements to make a prima facie case under § 2 of the WPA. Shallal, supra at 610. The plaintiff must show that (1) he was engaged in protected activity as defined by the act, (2) the defendant discharged him, and (3) a causal connection exists between the protected activity and the discharge. Id.
“Protected activity” under the WPA consists of (1) reporting to a public body a violation of a law, regulation, or rule; (2) being about to report such a violation to a public body; or (3) being asked by a public body to participate in an investigation. MCL 15.362; MSA 17.428(2). Plaintiff has not alleged that he reported a violation of the law to a public body or that he was about to report such a violation. Nor does plaintiff allege that he was requested to participate in a public investigation of any kind. In fact, plaintiff has made clear that he was not the person who reported the employer’s violation to the mdot.
The plain language of the statute does not protect plaintiff. The ordinary and generally accepted meaning of the words “reports,” “about to report,” and “requested by a public body to participate in an investigation” do not encompass plaintiff’s actions in the present case. The words are clear and do not readily lend themselves to more than one interpretation. As we noted in Shallal, “the implication is that the language of the Whistleblowers’ Protection Act intentionally reduces employee protection the more removed the employee is from reporting to a public body.” Id. at 613 (citation omitted).
There is no sliding scale in the wpa based on the employer’s intent. Regardless of the quantum of proof of the employer’s ill will, the act requires an employee to prove he was engaged in protected activity. The statute does not provide that the more obvious the employer’s bad behavior, the less the plaintiff is required to do. In fact, almost the opposite is true. This is evident from the requirement that an employee seeking protection under the “about to report” language of the act prove his intent by clear and convincing evidence. See MCL 15.363(4); MSA 17.428(3)(4). As we noted above, the statute reflects the intent of the Legislature that the further an employee is from reporting, the harder it is for an employee to prove a violation under the wpa.
c
Plaintiff points to this Court’s opinion in Sanchez v Lagoudakis, supra. In that case, the Court read language in the Michigan Handicappers’ Civil Rights Act (mhcra) similar to § 2 of the wpa to protect a person who was perceived to have a handicap. However, plaintiff’s comparison fails, because none of the factors that led the Court to interpret the mhcra to protect one who is regarded as having a handicap demands the same result under the Whistleblowers’ Protection Act.
First, the Michigan Civil Rights Commission, the agency charged with interpreting the meaning of the mhcra on a daily basis, determined that the act pro tected one regarded as having a handicap. Id. at 503. Here, there is no claim that any state agency has determined that the statute should be read to protect “perceived whistleblowers.”
Second, the Sanchez Court reviewed decisions from many other states, finding that “[c]ourts in other jurisdictions with discrimination laws similar to the act have consistently construed their statutes to protect persons perceived to be handicapped.” Id. Here, there is no overwhelming support for the definitional change in other jurisdictions, as there was under the MHCRA. In the whistleblower context, “laws similar to the [WPA]” are sufficiently different definitionally to make comparison between them on this issue ineffective. In the handicappers’ arena, the United States Supreme Court and many states determined that one regarded as having a handicap should be protected. Here, Michigan’s WPA gives broader protection than do most other states, so there is little with which to compare it.
Plaintiff points to this Court’s majority opinion in Shallal, supra, which analogized between qui tarn actions under the False Claims Act and the wpa. Plaintiff asserts that he would recover in a qui tarn action under the False Claims Act. The argument fails. First, the analogy to the qui tarn provisions was not necessary to the Court’s opinion in Shallal. Second, the definition of protected activity under qui tarn is very different from that under the wpa. Under the qui tarn provision, one could engage in protected activity by simply observing the wrongful activity and confronting the wrongdoer. See Shallal, supra at 618. There is no corresponding “confrontation” protection under the wpa. Instead, to come under the protection of the statute, a worker must engage in protected activity. Because the definitions of the two statutes differ on this specific issue, the analogy fails.
Third and most importantly, the Court noted that the Legislature had amended the mhcra in 1990, changing the definition of “handicap” to include “ ‘[b]eing regarded as having’ a handicap.” Sanchez at 506. On that basis, we held that denying protection to one perceived to have a handicap would go against the purpose and policy of that act. Here, there is no legislative amendment of the act to clarify the Legislature’s meaning.
Therefore, we determine the intent of the Legislature in enacting the bill from the words of the statute itself. The wpa, it appears, represents the Legislature’s judgment that one may best combat employer corruption and criminally irresponsible behavior by protecting employees who report that behavior to a public body. Protection under the act extends only to those employees engaged in protected activity as defined by the act, and plaintiff does not qualify for that protection.
[T]he Michigan Legislature has seen fit to require either actual reporting or proof by clear and convincing evidence that an employee was “about to report.” It has refused to bring within the protection of the act an employee who discusses reporting and who approaches the employer and threatens to report, but takes no further action. Perhaps this is regrettable and should be remedied. However, the lawmaking that is appropriate is legislative, not judicial. [Shallal, supra at 626-627 (Kelly, J., concurring in part and dissenting in part).]
The Legislature has chosen to define the group of persons covered by the act. We conclude that denying protection to plaintiff does not go against the legislative intent behind the enactment of the wpa.
D
Today’s opinion is consistent with recent decisions under the wpa. In Dickson v Oakland Univ, the Court of Appeals held that the WPA did not protect an employee who reported a violation by a co-worker. The panel held that the act extended only to reported violations of the employer.
This Court disagreed with Dickson in Dudewicz v Norris Schmid, Inc. In Dudewicz, the employee had reported a violation of the law by a co-worker. This Court held the wpa protected an employee who reported violations of his fellow employees.
More important for our discussion today is the Court’s understanding in Dudewicz that the wpa would not apply to protect one who does not engage in protected activity. In distinguishing the results in Dickson and Dudewicz, we stated: “Forgetting for a moment who broke the law, the plaintiff in Dickson reported the violation only to his employer, not to a public body within the meaning of the wpa. On these facts, the panel correctly found that the wpa was inapplicable.” Dudewicz, supra at 77, n 4.
Although dicta, this reasoning supports the Court’s conclusion today that the wpa does not apply to protect plaintiff. Like the plaintiff in Dickson, plaintiff here has not reported to a public body, nor does he allege that he was about to report. Here, as in Dickson, the wpa is inapplicable.
This Court has twice considered the wpa in the last year. First, in Dolan v Continental Airlines, the Court followed Dudewicz and held that the act protected an employee who reported a suspected violation by someone who was neither her employer nor a co-worker. Id. at 381. The plaintiff in Dolan was a ticket agent for Continental Airlines. Id. at 374. She was asked to report to the federal Drug Enforcement Agency passengers fitting a drug courier profile. Id. at 375. She reported two such persons. Continental then issued a memo forbidding employees from reporting without its permission. Id. After the memo was disseminated, the plaintiff called the dea again, and Continental fired her. Id. at 375-376. She alleged that, when she placed the postmemo call to the dea, it was merely to inquire about her reward. Id. at 376.
In Dolan, we held that “[a] plain reading of the wpa reveals that employees who report violations or suspected violations of the law to a public body are entitled to protection under the act.” Id. at 381. We held that the plaintiff there could recover even though the violation she reported was not that of her employer or of a co-worker. Id. at 382. The act was broad enough to cover violations of the law by a third person.
Finally, in Shallal, supra, an employee alleged that she was “about to report” and had expressly declared it to her employer. A majority held that, inter alia, the plaintiffs acts could provide sufficient evidence of intent for a reasonable juror to find by clear and convincing evidence that she was “about to report.” 455 Mich 619-620. Of course, the present case is easily distinguishable because, unlike the plaintiff in Shallal, plaintiff here does not allege that he was about to report.
The portion of our opinion in Shallal relevant for purposes of the present case relates to the majority’s understanding of the limits of the WPA’s protection. The majority in Shallal noted that “[a]n employee is engaged in protected activity under the Whistleblowers’ Protection Act who has reported, or is about to report, a suspected violation of law to a public body.” Id. at 610. Because the plaintiff there could not prove that she actually reported, her only other chance for protection under the statute was to qualify under the second option. “Hence, Shallal had the burden of establishing that a question of fact existed regarding whether she was ‘about to’ report [a] violation to a public body.” Id. at 611. Implicit in the majority’s statement is the conclusion that the plaintiff’s only other means for protection under the wpa was to prove she was “about to report.”
The majority understood that protection under the wpa was limited, and recognized one of the limitations the Legislature placed on the scope of the wpa. The Legislature could have defined protected activity to include confrontation, as in the False Claims Act. It could have allowed employees to recover without a showing of reporting or being about to report. It did neither. Instead, the Legislature defined protected activity as reporting a violation or being about to report one. The Legislature can and may rewrite the statute, but we will not do so.
iv
The wpa, as a remedial statute, is to be liberally construed to favor the persons the Legislature intended to benefit. Shallal, supra at 611. The Whistleblowers’ Protection Act was intended to benefit those employees engaged in “protected activity” as defined by the act. The act protects those who report or are about to report violations of a law, regulation, or rule to a public body. It protects those requested by a public body to participate in an investigation. Because one who engagés in no “protected activity” under the act is not intended to benefit from its operation, our decision does not affect the remedial nature of the act. Instead, we reaffirm the broad protection given to those employees who engage in protected activity, and merely recognize that not all employees are covered.
v
Plaintiff failed to state a prima facie case under the Whistleblowers’ Protection Act because he could not show facts from which to conclude that he was engaged in a protected activity. He did not allege that he reported a violation of a law, regulation, or rule, or that he attempted to report. We decline to extend coverage to one who is perceived to be a whistleblower, but who has not otherwise engaged in protected activity as defined by the act.
We affirm the decision of the Court of Appeals.
Mallett, C.J., and Brickley, Cavanagh, Boyle, Weaver, and Taylor, JJ., concurred with Kelly, J.
MCL 15.361 et seq.; MSA 17.428(1) et seq.
MCL 37.1101 et seq.', MSA 3.550(101) et seq.
At the time of the case, subsection 202(l)(b) provided that an employer shah not "[discharge or otherwise discriminate against an individual . . . because of a handicap . . . MCL 37.1202(l)(b); MSA 3.550(202)(l)(b). Sanchez, supra at 502.
31 USC 3730. See Shallal, supra at 616-619.
171 Mich App 68; 429 NW2d 640 (1988).
443 Mich 68; 503 NW2d 645 (1993).
454 Mich 373; 563 NW2d 23 (1997).
It is undisputed that the violation reported here was sufficient to trigger the protection of the act. As in Dolan, we decline to decide what connection between the violation and the employment, if any, is required. Dolan, supra at 382.
We express no opinion on the meaning of the statutory language regarding being “requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action.” | [
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Boyle, J.
We granted leave to appeal in this case to decide whether noise, dust, vibration, and fumes experienced by owners of property along an interstate freeway constitute a taking of a recognized property interest where the effects alleged are not unique or peculiar in character. We hold that such effects do not constitute a taking of a recognized property interest where the plaintiff fails to allege that the damages incurred are unique, special, or peculiar, or in some way different in kind or character from the effects incurred by all property owners who reside adjacent to freeways or other busy highways.
We reverse the decision of the Court of Appeals and reinstate the decision of the trial court granting summary disposition. Plaintiffs’ complaint fails to state a claim on which the relief sought may be granted. MCR 2.116(C)(8).
I
Plaintiffs Ronald and Peggy Spiek purchased residential property on Eleven Mile Road in the city of Warren in 1961, and have lived there ever since. Their property now abuts the service drive to Interstate 696. The service drive opened to traffic in 1976, and the section of the interstate running parallel to that service drive opened in 1979. The full extent of 1-696, as we now know it, running continuously from Interstate 275 near Farmington Hills and Novi to Interstate 94 near St. Clair Shores, was completed and opened in 1989.
On April 20, 1990, plaintiffs filed a complaint against defendant Department of Transportation for inverse condemnation in the Court of Claims, alleging that defendant’s actions in locating the service drive adjacent to their property had “so interfered with Plaintiffs’ quiet use and enjoyment of the property as to render it worthless, and to constitute a taking of property for public purpose without payment of just compensation, as required by the Michigan Constitution, Article 10, Section 3.” The complaint alleged that the defendant accomplished this taking by working
an essential change in the neighborhood [that] . . . violated restrictive covenants in the subdivision . . . [and] caused grave and serious damage to the value of the . . . property by increasing dramatically the levels of noise, vibrations, pollution and dirt in the once-residential area . . . [thus] destroy[ing] the desirability of the . . . property as an area for living and. . . destroy[ing] the acceptability of the property for residential purposes.
Defendant moved for summary disposition in the Court of Claims on April 23, 1991, pursuant to MCR 2.116(C)(7), (8), or (10), arguing that plaintiffs’ claim of damages was barred by the three-year period of limitation applicable to actions in the Court of Claims, and that plaintiffs’ claim of damages for traffic noise, vibration, emissions, and dirt did not constitute a taking that would entitle them to compensation. The trial court granted the motion on the basis of the statute of limitations, holding that the case was controlled by a six-year period. Plaintiffs sought reconsideration, and the trial court reversed itself, ruling from the bench that a fifteen-year period controlled. Plaintiffs’ action was reinstated on September 10, 1991.
On February 26, 1992, defendant filed a second motion for summary disposition pursuant to MCR 2.116(C)(8) or (10). Consistent with its previous motion, defendant argued as follows:
5. Construction of 1-696 and its service drive within the right of way abutting plaintiffs’ property does not constitute a taking of plaintiffs’ property. The type of injury alleged by plaintiffs is consequential and is suffered by all those whose property abuts a public highway.
6. Given the facts pled by plaintiffs, there is no legal support for plaintiffs’ inverse condemnation claim.
7. Plaintiffs have failed to state a claim upon which relief can be granted.
8. There is no genuine issue as to any material fact, and defendant is entitled to judgment as a matter of law.
In their response to defendant’s motion, plaintiffs answered paragraph 5 as follows: “Plaintiffs deny that Defendant’s actions do not constitute a taking, and further allege that to the extent that similarly-situated property-owners have been affected in a like manner, then they, too, are entitled to constitutionally-required just compensation.”
The trial court heard oral arguments and granted the defendant’s motion “as a matter of public policy.” During oral arguments, the trial judge asked plaintiffs’ counsel where or how to “draw the line” in this type of case. Ultimately, acknowledging difficulty with the question, the trial judge concluded that the plaintiffs’ “property ... is not included under the circumstances of this type of case,” and suggested that “a higher court [might] give us some better direction.” The Court of Appeals reversed:
[W]e conclude that the trial court erred in dismissing plaintiffs’ claim without affording them an opportunity to establish that their use and enjoyment of their property has been detrimentally affected to a degree greater than that of the citizenry at large in conjunction with the normal use of a highway. If they can so establish, then they are entitled to compensation for the reasons and principles set forth in Richards [v Washington Terminal Co, 233 US 546, 554-558; 34 S Ct 654; 58 L Ed 1088 (1914)]. See also United States v Causby, 328 US 256, 260-262; 66 S Ct 1062; 90 L Ed 1206 (1946). [212 Mich App 565, 568; 538 NW2d 74 (1995).]
In reaching this conclusion, the Court of Appeals reasoned as follows:
The trial court . . . did not dismiss plaintiffs’ claim because it believed there was not sufficient evidence to establish that plaintiffs’ property was burdened, indeed it even acknowledged that plaintiffs had suffered an intrusion because of the highway, but rather it dismissed the case because it believed that “there is a certain burden that each of us must bear,” that “we all use that highway” and it was “built for the common good.” However, as Justice Potter said in [James S Holden Co v] Connor [257 Mich 580, 596; 241 NW 915 (1932)], if the public work is a public benefit, then the public should pay for it. [212 Mich App 568.]
We initially disposed of this case by a peremptory order of reversal on the basis of MCR 2.116(C)(10). 453 Mich 857 (1996). On plaintiffs’ motion for reconsideration, we granted leave to appeal. 454 Mich 905 (1997). We conclude that the Court of Appeals erred in its interpretation of the governing legal principles.
n
A
Appellate review of a motion for summary disposition is de novo. MCR 2.116(C)(8) tests the legal sufficiency of the claim on the pleadings alone to determine whether the plaintiff has stated a claim on which relief may be granted. The motion must be granted if no factual development could justify the plaintiff’s claim for relief. MCR 2.116(C)(10) tests the factual support of a plaintiff’s claim. The court considers the affidavits, pleadings, depositions, admissions, and other documentary evidence submitted or filed in the action to determine whether a genuine issue of any material fact exists to warrant a trial. Singerman v Municipal Service Bureau, Inc, 455 Mich 135, 138; 565 NW2d 383 (1997). See also Skinner v Square D Co, 445 Mich 153, 160-161; 516 NW2d 475 (1994).
The defendant did not separately argue the standards under MCR 2.116(C)(8) and MCR 2.116(C)(10), and the trial court did not specifically state whether it was granting defendant’s motion for summary disposition on the basis of subrule (C)(8) or (10). However, we conclude that review under subrule (C)(8) is appropriate because the factual record in this case is limited to the record made before the trial court. We find nothing in the record to indicate that the trial court reviewed matters outside the pleadings; thus, our inquiry is confined to the analysis normally applied to a MCR 2.116(C)(8) motion.
We conclude that plaintiffs’ complaint fails to state a claim on which the relief sought may be granted. Taking all plaintiffs’ factual allegations as true, the complaint fails to allege an essential element of their cause of action: that the damage to their property is of a unique or peculiar character different from the effects experienced by all other similarly situated property owners. In other words, plaintiffs fail to allege an injury unlike that experienced by all who live in proximity to a highway. Thus, their case is barred by the well-accepted rule that property owners are not entitled to compensation for highway noise that is necessarily incident to proximity to a highway.
B
In deciding whether plaintiffs’ complaint survived defendant’s motion for summary disposition, the Court of Appeals reasoned as follows:
It has long been recognized that a diminution in the value of property where there is no direct invasion of the property, does not result in a taking that requires compensation. See Richards v Washington Terminal Co, 233 US 546, 554-558; 34 S Ct 654; 58 L Ed 1088 (1914). However, that principle is founded upon necessity and is limited accordingly, and compensation will be due where the burden to the property goes beyond the incidental injuries that would normally be attendant and shared generally by the property owners whose lands lie within the range of inconveniences. Id.
In Richards, the Court addressed the construction of a railroad, distinguishing between the inconveniences normally attendant to property located near a railroad track and those located by a railroad tunnel, which posed additional, peculiar burdens. Similarly, this Court concluded that compensation could be due to property owners in the neighborhood of an airport where the air traffic caused unbearable noise and property damage to nearby land. See Standen v Alpena Co, 22 Mich App 416; 177 NW2d 657 (1970).
In addition to trains and planes, the automobile has been considered by our Supreme Court, which concluded that compensation was due a property owner where his property was burdened by a change in incline on a road passing by his farmland. Thom v State Hwy Comm’r, 376 Mich 608; 138 NW2d 322 (1965). The following observation of the lead opinion in Thom is particularly noteworthy:
“While we might well agree that society’s interests are paramount to the individual’s insofar as the latter may not, for his own convenience, prohibit a grade change, we do not agree with the Grigg Hanna [Lumber & Box Co v State Hwy Comm’r, 294 Mich 346; 293 NW 675 (1940)] ruling that society may justly benefit itself at the expense of an individual by failing to compensate him for damage done to him in order to procure society’s benefit. As Mr. Justice Potter, who wrote for the Court in the first Grigg Hanna Case, said in his earlier concurring opinion in James S Holden Co v Connor [257 Mich 580, 596; 241 NW 915 (1932)]:
“ ‘It has always been a basic principle of the law that “If the work is of great public benefit, the public can afford to pay for it.” Eaton v Railroad Co [51 NH 504, 518; 12 Am Rep 147 (1872)].’ [Thom, supra at 623.]” [212 Mich App 566-568.]
The Court of Appeals references the relevant precedents. However, we respectfully disagree with the application of those authorities to this case.
The Court of Appeals concluded that, under Richards, plaintiffs must be given the opportunity to demonstrate that their property was “detrimentally affected to a degree greater than that of the citizenry at large in conjunction with the normal use of a highway.” 212 Mich App 568 (emphasis added).
In Richards, the plaintiff sued for diminution in the value of his property caused by a railroad being located adjacent to his property. However, unlike others whose property the railroad affected, the plaintiffs property was situated so that when the train went through a tunnel, the “smoke . . . cinders and gasses” from the train were expelled onto the plaintiffs property and into his home by “a fanning system installed in the tunnel . . . ” Id. at 549. The plaintiff also alleged that his house had been “damaged by vibrations caused by the movement of trains on the track or in the tunnel, resulting in cracking the walls . . ., breaking glass . . ., and disturbing the peace and slumber of the occupants.” Id. at 550. The United States Supreme Court reversed the dismissal of the plaintiffs claim because the effects of the railroad passing through the tunnel near his property were unique and peculiar to him. The Court explained that recovery was available only
in the single particular already alluded to, — that is to say, with respect to so much of the damage as is attributable to the gases and smoke emitted from locomotive engines while in the tunnel, and forced out of it by the fanning system therein installed, and issuing from the portal located near to plaintiff’s property in such manner as to materially contribute to render his property less habitable than otherwise it would be, and to depreciate it in value .... [Id. at 556.]
The plaintiff was not allowed to seek recovery for the separate allegation of vibration causing cracks, etc., because this type of harm is that which all persons living near the railroad would suffer in common. Thus, the Court of Appeals conclusion that plaintiffs could recover if affected to a different, degree than the citizenry at large fails to properly consider the more specific inquiry required by Richards: the effect on those property owners whose lands lie within the range of inconveniences necessarily incident to the operation of a railroad. Indeed, the very passage from Richards on which the Court of Appeals purported to rely reveals that the plaintiffs here have failed to meet the requirements of that case:
Any diminution of the value of property not directly invaded nor peculiarly affected, but sharing in the common burden of incidental damages arising from the legalized nuisance, is held not to be a “taking” within the constitutional provision. The immunity is limited to such damages as naturally and unavoidably result from the proper conduct of the road and are shared generally by property owners whose lands lie within range of the inconveniences necessarily incident to proximity to a railroad. It includes the noises and vibrations incident to the running of trains, the necessary emission of smoke and sparks from the locomotives, and similar annoyances inseparable from the normal and non-negligent operation of a railroad. [Id. at 554]
While allowing the plaintiff to seek recovery for the peculiar effects of the tunnel exhaust system, the Court denied the plaintiff the right to seek recovery for vibration, because “those consequential damages that are necessarily incident to proximity to the railroad” are not compensable. Id. The Court of Appeals incorrectly concluded that Richards supported the conclusion that the plaintiffs could recover if they could show they were harmed to a degree greater than the citizenry at large. The plaintiff in Richards prevailed, not merely on the basis of a difference in degree from the inconvenience experienced by the public at large, but because the harm he suffered was different in kind or character from that experienced by those similarly situated.
The Court of Appeals also referenced United States v Causby, supra. However, in that case, the United States Supreme Court concluded that the persistent intrusion of low-flying aircraft over the plaintiffs’ land amounted to a physical invasion of the property subject to compensation as a taking of the property. The Court reasoned:
We have said that the airspace is a public highway. Yet it is obvious that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. . . . The principle is recognized when the law gives a remedy in case overhanging structures are erected on adjoining land. The landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. . . . The fact that he does not occupy it in a physical sense — by the erection of buildings and the like — is not material. As we have said, the flight of airplanes, which skim the surface but do not touch it, is as much an appropriation of the use of the land as a more conventional entry upon it. . . . [I]f the United States erected an elevated railway over respondents’ land at the precise altitude where its planes now fly, there would be a partial taking, even though none of the supports of the structure rested on the land. The reason is that there would be an intrusion so immediate and direct as to subtract from the owner’s full enjoyment of the property and to limit his exploitation of it. . . . The super-adjacent airspace at this low altitude is so close to the land that continuous invasions of it affect the use of the surface of the land itself. We think that the landowner, as an incident to his ownership, has a claim to it and that invasions of it are in the same category as invasions of the surface. [Id. at 264-265 (emphasis added).]
Causby is also distinguishable from the case before us. Our plaintiffs have not suffered a physical invasion. Causby is a singular example tailored to the unique requirements of modem air travel and its effects on land ownership rights. Whereas a taking akin to a physical intrusion was compensable in Causby, the plaintiffs here experienced the type of effects referenced by the Supreme Court in Richards as part of the incidental inconvenience of living in proximity to the road.
Further, the Court’s analysis in Causby was wholly consistent with its analysis in Richards. In Causby, the Court reasoned:
The airplane is part of the modem environment of life, and the inconveniences which it causes are normally not compensable under the Fifth Amendment. The airspace, apart from the immediate reaches above the land, is part of the public domain. . . . Flights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land. [Id. at 266-267 (emphasis added).]
Thus, only the plaintiff uniquely affected by the physical invasion of frequent low-flying aircraft will recover for a taking, while those suffering merely the normal inconveniences of modem air travel over their lands at higher altitudes will not recover. Just as in Richards, where the fanning system on the tunnel uniquely harmed the plaintiff, in Causby the aircraft were uniquely harmful to those over whose property the aircraft consistently flew at low altitude, thereby amounting to a physical invasion. Again, the analysis turned on the fact that the plaintiff suffered harm that differed in kind, as opposed to degree, from the harm suffered by others similarly situated or the public at large. Were the inquiry simply a matter of degree, the conclusion that a physical invasion had occurred would have been unnecessary. However, recovery was available only after the Court concluded that the plaintiff, unlike others living under the flight path at higher altitudes, suffered a unique physical invasion of his property. It is precisely this factor, which the Supreme Court and this Court have identified as critical to the analysis, that the Court of Appeals failed to acknowledge.
c
Courts commonly refer to the persistent passing of trains on a railroad, or planes in the air, or vehicles on the road as “legalized nuisances.” See, e.g., Richards, supra at 552-554. As explained above, if such a legalized nuisance affects all in its vicinity in common, damages generally are not recoverable under just-compensation theory. Courts treat such common harms as incidental effects not amounting to an appropriation. Cf. Peterman v Dep’t of Natural Resources, 446 Mich 177, 190; 521 NW2d 499 (1994) (acknowledging recovery where partial destruction or diminution in value “directly and not merely incidentally affects” the property). Where, however, the plaintiff alleges that the property is directly affected in a manner that is unique or peculiar in comparison to the property of other similarly situated persons, the plaintiff states a claim for which the relief sought may be granted under well-established principles for proving the right to compensation. This immunity against recovery for the effects of a legalized nuisance exists under the rubric of the common-law doctrine of damnum absque injuria, which underlies the reasoning offered in the cases discussed above.
Black’s Law Dictionary (6th ed), p 393, defines damnum absque injuria as follows:
Loss, hurt, or harm without injury in the legal sense; that is, without such breach of duty as is redressible by a legal action. A loss or injury which does not give rise to an action for damages against the person causing it.
Several Michigan cases have discussed the concept of damnum absque injuria in the context of taking jurisprudence as applied to public highways. Over one hundred years ago, in Buhl v Fort Street Union Depot Co, 98 Mich 596; 57 NW 829 (1894), this Court recognized the distinction between special or peculiar injuries and injuries suffered in common with the general public. In Buhl, the defendant obtained property from the city of Detroit for the purpose of maintaining a depot, which required the closing of Fourth Street between Congress and Fort Streets in downtown Detroit. Id. at 597. The plaintiff sued because his property was made “less accessible,” and alleged, inter aha, a taking. Id. The Court explained:
In Glasgow v St Louis, 107 Mo 204 [17 SW 743 (1891)], the plaintiffs sought to enjoin the vacation of Papin street, from Twelfth street to Thirteenth street, one block east of property owned by plaintiffs, lying between Thirteenth and Fourteenth streets. The situation of the property was not materially different from the property of plaintiff in the present case. The court said:
“There is no doubt but a property-owner has an easement in a street upon which his property abuts which is special to him and should be protected, but here the plaintiffs own no property fronting or abutting on the part of the street which was vacated. Their property is surrounded by streets not touched or affected by the vacating ordinance. They will be obliged to go a little further to reach Twelfth street, but that is an inconvenience different in degree only from that suffered by all other persons, and it furnishes no ground whatever for injunctive relief.
“Nor are the plaintiffs entitled to any relief by reason of the clause in the present constitution which declares ‘that private property shall not be taken or damaged for public use without just compensation.’ To entitle them to relief because their property will be damaged, though not taken, they must show a special injury. Here there is no physical interference with their property, nor is any right or easement connected therewith or annexed thereto affected. They will, therefore, suffer no injury which is special or peculiar to them. The inconvenience, if any in reality there is, is the same as that cast upon other persons. For these reasons the constitutional amendment furnishes them no ground for complaint.”
We think the weight of authority in this country fully sustains the contention of defendant that such an injury as that resulting to the plaintiff here is one which he suffers in common with the general public, and damnum absque injuria. [Id. at 607 (emphasis added).]
The right to just compensation, in the context of an inverse condemnation suit for diminution in value caused by the alleged harmful affects to property abutting a public highway, exists only where the landowner can allege a unique or special injury, that is, an injury that is different in kind, not simply in degree, from the harm suffered by all persons similarly situated. While the Michigan courts have not had the opportunity to address this issue directly in recent years, the overwhelming weight of foreign authority supports this conclusion, as do contemporary public policy considerations.
In the context of traffic flow, a degree of harm threshold, as opposed to the well-established difference in kind threshold, would be unworkable both in a practical sense and from the standpoint of public policy because it would depend on the amount of traffic traveling a particular highway at a particular time that may change over time because of factors unrelated to and out of the control of the state. For example, demographic changes and economic changes affecting commercial and industrial development may determine the degree of harm, rather than the actual location of the highway in a particular place by the state. To require the state to litigate every case in which a person owning land abutting a public highway feels aggrieved by changing traffic conditions would wreak havoc on the state’s ability to provide and maintain public highways and place within the judicial realm that which is inappropriate for judicial remedy. Where harm is shared in common by many members of the public, the appropriate remedy lies with the legislative branch and the regulatory bodies created thereby, which participate extensively in the regulation of vibrations, pollution, noise, etc., associated with the operation of motor vehicles on public highways. Only where the harm is peculiar or unique in this context does the judicial remedy become appropriate.
We are persuaded that the Court of Appeals erred in concluding that plaintiffs could recover if affected to a different degree than the public at large. Sum mary disposition in favor of the defendant in the Court of Claims was appropriate. Plaintiffs were required to overcome the doctrine of damnum absque injuria by alleging harm of a character different from that suffered by all living in similar proximity to a highway.
Plaintiffs’ complaint does not allege harm to plaintiffs’ property that differs in kind from the harm suffered by all living in proximity to a public highway in Michigan. Rather, plaintiffs’ complaint alleges the same type of incidental and consequential harm as is experienced by all persons similarly situated to plaintiffs in that they reside near a public highway. Moreover, plaintiffs did not seek leave to amend their complaint, instead maintaining in response to defendant’s motion for summary disposition and on appeal that recovery was available if the harm suffered merely differed in degree from the inconvenience experienced by the public at large. Because this type of harm is not sufficient under any circumstances to support an award of just compensation for a taking, plaintiffs failed to state a claim upon which relief may be granted under MCR 2.116(C)(8).
in
The just-compensation requirement in the Michigan Constitution does not require the state to compensate every property owner living in proximity to a public highway for the normal inconveniences associated therewith. The plaintiff states a claim for which relief may be granted only where the plaintiff alleges harm of a unique or peculiar kind. We reverse the decision of the Court of Appeals and reinstate the trial court’s order granting defendant’s motion for summary disposition.
Mallett, C.J., and Brickley, Cavanagh, Weaver, Kelly, and Taylor, JJ., concurred with Boyle, J.
We do not reach the issue whether the statute of limitations barred plaintiffs’ action here, nor do we reach plaintiffs’ contention that defendant was required to file a cross appeal to preserve that issue for review.
We do not reach the issue whether plaintiffs have demonstrated a genuine issue of material fact under MCR 2.116(C)(10). Plaintiffs seek recovery on the basis of the argument that their damages are unique in degree, rather than in character. Because we conclude that the claim as framed does not state a legally cognizable ground for a damage remedy, the issue whether there is a question of fact regarding the degree of harm is irrelevant. See ns 9-10.
This Court has held:
An inverse or reverse condemnation suit is one instituted by a landowner whose property has been taken for public use “without the commencement of condemnation proceedings.” . . . Under Michigan law, a “taking” for purposes of inverse condemnation means that governmental action has permanently deprived the property owner of any possession or use of the property. [ElectroTech, Inc v H F Campbell Co, 433 Mich 57, 88-89; 445 NW2d 61 (1989).]
However, more recently we stated:
“Any ipjury to the property of an individual which deprives the owner of the ordinary use of it is equivalent to a taking, and entitles him to compensation. So a partial destruction or diminution of value of property by an act of government, which directly and not merely incidentally affects it, is to that extent an appropriation.” [Peterman v Dep’t of Natural Resources, 446 Mich 177, 190; 521 NW2d 499 (1994).]
Plaintiffs’ complaint does not allege a violation of the Fifth Amendment of the United States Constitution.
MCL 600.6452; MSA 27A6452.
MCL 600.5813; MSA 27A.5813.
MCL 600.5801(4); MSA 27A5801(4).
On October 21, 1991, the trial court dismissed plaintiffs’ claim that defendant had violated restrictive covenants in plaintiffs’ subdivision. That order is not currently before this Court.
Where summary disposition is granted under the wrong rule, Michigan appellate courts, according to longstanding practice, will review the order under the correct rule. Energy Reserves, Inc v Consumers Power Co, 221 Mich App 210, 216; 561 NW2d 854 (1997); Johnson v Davis, 156 Mich App 550, 553; 402 NW2d 486 (1987). Consistent with that policy, because we find no indication in the trial court’s ruling that the court reviewed evidence outside the pleadings in ordering summary disposition, we review the case under MCR 2.116(C)(8), which is the correct rule under these circumstances. Accord FR Civ P 12(b), where the court considers matters outside the pleadings when ruling on a motion asserting the defense under 12(b)(6) (failure to state a claim), the motion shall be treated as a motion for summary judgment under FR Civ P 56. This practice in state and federal courts grows out of recognition of the principle that where “[a] motion for summary judgment [is made] solely on the pleadings . . ., it is functionally the same as a motion to dismiss or a motion for judgment on the pleadings.” 6 Moore, Federal Practice (2d ed), ¶ 56.02[3], pp 56-26 to 56-27 and ns 10-11 and accompanying text.
Plaintiffs attached certain documentary evidence to their submission here. Because this material was not presented or filed in the trial court, and, thus, is not part of the record on appeal, we do not consider it. The record in this case is limited to the pleadings filed, the transcript of proceedings before the trial court, the parties’ motions and responses, and the other papers filed with the trial court. The trial court did not consider plaintiffs’ exhibits in ruling on defendant’s motion.
In Standen, supra, the Court of Appeals addressed the “sole issue” whether “[assuming that plaintiffs have proven an unconstitutional taking of their property and are entitled to recover, . . . the county of Alpena [is] liable to the plaintiffs for . . . damages . . . .” Id. at 418. Because the case did not address the issue whether a taking had occurred, the Court of Appeals reliance on this case to support its conclusion was also misplaced.
In Thom, supra, on which the Court of Appeals also relied, the plaintiffs owned a farm in Lapeer. Id. at 625. We recognized a taking where the “State highway department . . . improve [d] M 53 ... . When construction was completed, the grade of M 53 was 10 feet higher than the [plaintiff’s access] drive at its southern intersection and eight feet higher than the drive at its northern intersection . . . .” Id. at 625-626. The plaintiff had “great difficulty in moving his machinery off’ the property. Id. at 626. We concluded that this was a “partial taking of plaintiffs’ property,” id. at 627, because the change in the grade “demonstrably injure[d] the property,” id. at 617, and thereby injured the plaintiffs’ “right of reasonable access” to their property, which is an “ ‘indefeasible right.’ ” Id. at 618. Thom involved not the ordinary inconveniences of proximity to a public highway, but a clear injury to the plaintiffs’ indefeasible right of reasonable access. Thus, Thom furnishes no authority for the proposition that plaintiffs can recover here.
13 See also Tomazewski v Palmer Bee Co, 223 Mich 565, 569; 194 NW 571 (1923) (where the owner does not suffer “any injury different in kind from the general public but only in degree,” the injury is damnum absque injuria); Case v City of Saginaw, 291 Mich 130, 141; 288 NW 357 (1939) (“ ‘[Ajcts done in the proper exercise of governmental powers, and not directly encroaching upon private property, though their consequences may impair its use, are universally held not to be a taking within the meaning of the constitutional provision’ ”).
In Friends of H Street v Sacramento, 20 Cal App 4th 152; 24 Cal Rptr 2d 607 (1993), the California Court of Appeals addressed a factual situation similar to the one presented here. The plaintiffs alleged, inter alia, excessive traffic, excessive traffic speeds, excessive noise, noxious fumes, impairment of residential use, and safety hazards. The court denied relief, stating, “Plaintiffs fail to allege they suffered unique, special or peculiar damages, that is, ‘not such as is common to all property in the neighborhood’ . . . .” Id. at 167. The court explained further:
“Modem transportation requirements necessitate continual improvements of streets and relocation of traffic. The property owner has no constitutional right to compensation simply because the streets upon which his property abuts are improved so as to affect the traffic flow on such streets. If loss of business or of value of the property results, that is noncompensable. It is simply a risk the property owner assumes when he lives in modem society under modem traffic conditions.” [Id.]
See also Dep’t of Transportation v Rasmussen, 108 Ill App 3d 615, 621-622; 439 NE2d 48 (1982) (a greater degree is insufficient; peculiar and direct physical disturbance is required; depreciation suffered in common by aU lands in the vicinity of an improvement is not compensable); Public Service Co of New Mexico v Catron, 98 NM 134, 136; 646 P2d 561 (1982) (damages must be different in kind, not merely degree); State v Schmidt, 867 SW2d 769, 781 (Tex, 1993) (inconveniences shared by an entire area through which a highway runs is not compensable absent peculiar harm; a difference in degree is insufficient), cert den 512 US 1236 (1994); Yakima v Damn, 5 Wash App 129, 131-132; 485 P2d 628 (1971) (allowing recovery where an overpass created an “echo chamber” that distinguished plaintiffs “special circumstances” from an injury common to all property in the neighborhood).
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Boyle, J.
We granted leave to appeal to decide whether the trial court erred in its determination that the plaintiff, in this malicious prosecution action, sustained the burden of presenting a jury submissible issue of fact regarding probable cause for criminal prosecution. We hold that plaintiff failed to meet that burden and that the trial court’s conclusion to the contrary was error.
In Michigan, prosecution is initiated in the sole discretion of the prosecutor. There was no evidentiary basis for the claim that the prosecution was initiated or maintained by defendant’s agents. An independent investigation conducted by the state police supported probable cause to believe that a crime had been committed. There was no evidence to dispute probable cause, and the trial court should have directed a verdict for the defendant and determined that probable cause was established as a matter of law.
i
Because the issues involved in the claim of malicious prosecution turn on which issues are or might be controverted, we begin our analysis with the following undisputed facts.
Dr. Robert Matthews, a dentist specializing in orthodontics, was charged and acquitted in a bench trial of three counts of false pretenses with intent to defraud over one hundred dollars and two counts of filing false health care claims involving surgeries performed at Sinai Hospital. The prosecution had alleged that Dr. Matthews had been paid by Blue Cross for services he did not perform or for which he was not entitled to claim reimbursements. Dr. Matthews had billed technical surgical assistance (tsa) under the regular business classification for Blue Cross physician providers for participation in oral orthognathic surgeries performed at Sinai Hospital by several dif ferent oral surgeons on a number of orthodontic patients.
Technical surgical assistance was described by Blue Cross in the regular business section of the physician’s instruction manual, p 2-20, as “[t]he professional, active assistance given the operating physician ... for an eligible surgical or obstetrical procedure.” Surgical benefits are “available wherever provided when medically necessary.” Id., p 2-19. The manual specifies that claims for billings submitted under the regular business program are subject to the following restrictions: (1) the location of service must be “inpatient” hospital; (2) the service can “only be billed when surgical assistance by a hospital intern, resident or house officer is not available,” (3) in “institutions with an approved intern resident training program, the surgeon in charge must certify that ser rices of interns, residents or house officers were not available;” (4) such certification is to “be submitted with the tsa claim.”
The section of the policy manual dealing with copayments under the Blue Cross cost-sharing programs was added to the Physician’s Manual in 1984. It covers subscriber contracts that require both deductibles and copayments. As with the regular business program, the cost-sharing policy provided that “[a]ll services that are listed as benefits are only payable if they are medically necessary.” The section of the manual setting out the policy for reimbursing claims under the regular business program used the word “active” in describing the surgical assistance services that would be reimbursed under that program. The word “active” was not included in describing technical surgical assistance services in the cost-sharing programs. However, both programs had identical limitations regarding payment for technical surgical assistance for surgeries performed in a teaching hospital. Because Sinai Hospital was a teaching hospital and had interns and residents, the claims were not reimbursable under either program without a certification by the surgeon in charge that the services of a resident, intern, or house officer was unavailable.
II
The criminal charges against Dr. Matthews were initiated by the Oakland County prosecutor following an investigation by the state police on the basis of information submitted by Dennis Drake, a Blue Cross and Blue Shield financial investigator. Mr. Drake’s investigation of billing irregularities was precipitated by a call to the Blue Cross fraud hot line by LeAnne Pierce, a former employee of Dr. Matthews, who alleged that she had altered surgical reports while billing services for his dental practice. Drake completed an internal investigation that included a review of sixty technical surgical assistance claims submitted by Dr. Matthews, consultation with Blue Cross consultants, and interviews with oral surgeons in the community. Drake then turned over his report to Detective Wayne Waldron of the Michigan State Police. Waldron undertook a three-month independent investigation in which he personally interviewed Ms. Pierce, the employee who had alerted Blue Cross to the existence of possible fraud; the five oral surgeons who had operated on the five patients for whom Dr. Matthews claimed payment from Blue Cross that became the basis for the criminal charges; Dr. Jeffrey Topf, chairman of Sinai Hospital’s oral surgery department; Dr. Byron Attenson, oral surgeon and Blue Cross dental consultant; and Diane Freilich, Dr. Matthews’ attorney.
Pierce advised Waldron that she had falsified surgical reports to represent that Dr. Matthews had assisted at surgeries. She stated that at Matthews’ direction, she had aligned his name on the operative note directly below the operating physician’s name, using a special typing ball. Pierce then copied the altered report and submitted it with the claim form to Blue Cross for payment. Review of the hospital surgical register and copies of the reports on the five patients identified in the charge revealed that Dr. Matthews’ name did not appear on any of the documents as having been part of the original surgical team. Ms. Pierce also told Waldron that the operative notes were received from various oral surgeons’ offices because the hospital had refused to send them and that Dr. Matthews personally reviewed all claims sent to Blue Cross for completeness.
Waldron interviewed Doctors William Aughton, Myron Kaufman, Jonathan Anderson, James Lepczyk, and Robert Macintosh, each of whom told Waldron that they had not given Dr. Matthews permission to type his name on their surgical reports. Additionally the doctors provided information that 1) Dr. Matthews did not scrub or assist in performing the surgical operation, 2) Dr. Matthews stayed only for a short time during the lengthy surgery if he appeared at all, 3) there was no valid medical reason for Dr. Matthews to be in the operating room, and 4) that most doctors were not aware that Dr. Matthews was billing for technical surgical assistance.
Waldron was also advised by Blue Cross consultant Dr. Attenson, that he had informed Dr. Matthews in July, 1984, that it was error for him to bill for technical surgical assistance because it required hands-on assistance, that at no time were payments for such benefits paid to orthodontists, that there was no medical reason for an orthodontist to be present at oral surgery, and that Dr. Matthews was the only orthodontist currently attending the surgeries and billing for such “assistance.” Dr. Attenson also stated that because Sinai had interns and residents, oral surgeons on staff must use them for technical surgical assistance and that where in-house assistance was not available for this service, lack of availability must be certified in writing and submitted with the claim for payment.
Dr. Matthews declined to be interviewed, and his attorney, Diane Freilich, responded to Waldron’s questions on behalf of Dr. Matthews. She stated that Mr. Jack Hill, a Blue Cross employee, had furnished Dr. Matthews with a medical provider number and had told him how to apply for technical surgical assistance benefits. She maintained that Dr. Matthews was unaware of the Blue Cross definition of technical surgical assistance because he was never given a provider manual by Blue Cross and that he only billed technical surgical assistance on surgeries where he stayed for his part of the surgery, which lasted from one half to one hour and that if he just briefly stopped by he did not bill. Additionally she claimed that Dr. Matthews put his name on the surgical report because Blue Cross asked him to do so (although he could not remember who so advised him) and that there were other orthodontists claiming payment for technical surgical assistance in the area (although she could not provide their names). Attorney Freilich stated that Dr. Matthews also denied talking to any oral surgeons about filing technical surgical assistance fees on their cases and denied being told by Dr. Attenson not to claim technical surgical assistance benefits. Assistant Oakland County Prosecutor Ralph Charles Claus, Jr., authorized issuance of a warrant. Waldron signed and swore to the complaint, which was issued by an Oakland County judge.
m
Testimony at the preliminary examination basically replicated the information in Waldron’s report. The defendant was bound over for trial in circuit court.
A bench trial was held before the Honorable Frederick Ziem. The prosecution’s proofs apparently consisted of testimony similar to that adduced at the preliminary examination, supplemented by that of additional witnesses. Dr. Matthews testified in his own defense, contending essentially that he lacked criminal intent to file false claims or to defraud. The trial judge denied Dr. Matthews’ motion for a directed verdict of acquittal. The trial court found that guilt had not been established beyond a reasonable doubt and acquitted the defendant.
iv
Dr. Matthews filed the instant action of malicious prosecution against Blue Cross and Blue Shield. As far as can be determined, Dr. Matthews’ theory of liability was that the agents of Blue Cross acted improperly because they had not informed the prosecutor that the cost-sharing programs did not include the word “active” in describing the policy concerning reimbursement for claims of technical surgical assistance. The trial court denied the defendant’s motion for a directed verdict at the close of the proofs. The jury found in favor of Dr. Matthews and awarded $1,275,000 in damages. The defendant’s motion for judgment notwithstanding the verdict was denied.
The Court of Appeals affirmed. Unpublished opinion per curiam, issued April 13, 1995 (Docket No. 145934). We granted the defendant’s application for leave to appeal “limited to whether there was a question of fact that required the issue of probable cause to be submitted to the jury.” 453 Mich 960 (1996).
v
Probable cause involves a determination of both the historical facts and whether the rule of law as applied to the facts is violated. As the Supreme Court recently observed in the context of reviewing a question of reasonable suspicion or probable cause under the Fourth Amendment, “as a general matter determinations of reasonable suspicion and probable cause should be reviewed de novo on appeal.” Ornelas v United States, 517 US 690, 699; 116 S Ct 1657; 134 L Ed 2d 911 (1996). Because the inquiry before us concerns a question of law, the existence of probable cause, our review is de novo.
A
Malicious prosecution is a tort that “runs counter to obvious policies of the law in favor of encouraging proceedings against those who are apparently guilty, and letting finished litigation remain undisturbed and unchallenged.” Prosser & Keeton, Torts (5th ed), § 119, p 876. However, the interests of persons wrongfully prosecuted must also be protected. Balancing the interests involved, actions for malicious prosecution have historically been limited by restrictions that make them difficult to maintain. Id. Renda v Int'l Union, UAW, 366 Mich 58, 75; 114 NW2d 343 (1962).
The plaintiff has the burden of proving (1) that the defendant has initiated a criminal prosecution against him, (2) that the criminal proceedings terminated in his favor, (3) that the private person who instituted or maintained the prosecution lacked probable cause for his actions, and (4) that the action was undertaken with malice or a purpose in instituting the criminal claim other than bringing the offender to justice. Rivers v Ex-Cell-O Corp, 100 Mich App 824, 832; 300 NW2d 420 (1980), citing Weiden v Weiden, 246 Mich 347, 352; 224 NW 345 (1929).
B
Before turning to the issue of probable cause, we initially address several propositions advanced at trial and on appeal that seem to have obscured proper analysis of this case. In his opening statement, plaintiffs counsel maintained that there was an absence of probable cause to prosecute:
Probable cause means that there is a reason to believe that someone has committed a crime, and that’s a simplistic way of putting it, but I submit to you and will argue to you later, that you can’t have probable cause if you don’t make a full disclosure. If you don’t tell the prosecuting authority all of the facts and give them the right definition, and if you distort what’s being said, then you can’t possibly have— have a reasoned decision being made by the prosecuting authority. So that’s what happened here. There will be — we will show you an absence of probable cause because they didn’t make full disclosures and because the disclosures that they made were untruthful. And I think I mentioned to you that they ignored the court’s order to produce exculpatory information. ... It shows that they intended to — to prosecute this man without any regard to whether they were bringing someone to justice.
However, the plaintiff’s burden in a malicious prosecution case is to make a prima facie showing that the defendant’s agents lacked probable cause to believe that the plaintiff had committed a crime. Whether the prosecutor might have made a different decision is irrelevant to that issue.
A public prosecutor is not liable for malicious prosecution. A plaintiff’s prima facie case against a private person requires proof that the private person instituted or maintained the prosecution and that the prosecutor acted on the basis of information submitted by the private person that did not constitute probable cause.
Additionally, the plaintiff’s contention that defendant was obligated to make full and fair disclosure or be liable for malicious prosecution confused the elements of plaintiff’s prima facie case with the affirma tive defense of reliance on advice of an attorney. A private person who institutes or maintains a prosecution without probable cause may avoid liability on the ground that he instituted the prosecution at the direction or on the advice of the prosecutor, where he offers proof sufficient to permit a finding that he made a full and fair disclosure of the material facts. This defense is simply not in issue unless the plaintiff makes out a prima facie case. Thus, unless the plaintiff presents a prima facie case that the private defendant instituted or maintained the criminal proceeding and that it was instituted or maintained without probable cause the question of the defendant’s reliance on legal advice is immaterial.
Finally, and assuming arguendo that plaintiff’s proofs make out a prima facie case, want of probable cause is a question of law to be determined by the court. Modla v Miller, 344 Mich 21; 73 NW2d 220 (1955). Where the facts on which the issue turns are in dispute, the question is for the jury. The jury resolves factual disputes regarding the circumstances under which the private person who initiates, procures, or maintains a prosecution might be found to have acted without probable cause. Whether the facts constitute probable cause is a matter for the court to determine. Koski v Vohs, 426 Mich 424, 431; 395 NW2d 226 (1986).
c
Although further discussion of the first and third observations is unnecessary, additional explanation is in order regarding the plaintiffs obligation to show that the defendant initiated, continued, or maintained the prosecution and that probable cause is a question of law. We discuss them seriatim.
The plaintiff failed to show that defendant’s agents instituted the proceeding or maintained it. The prosecutor authorized the warrant, and Detective Waldron was the complainant The warrant request was based on Waldron’s independent investigation, not on the information the defendant’s agent submitted. As the chief law enforcement officer of the county, a prosecutor has independent authority to initiate criminal prosecutions. MCL 764.1; MSA 28.860. A warrant may not be issued without the prosecutor’s written authorization unless security for costs is given. Bloss v Williams, 15 Mich App 228, 233; 166 NW2d 520 (1968). Thus, in Michigan, the prosecutor’s exercise of his independent discretion in initiating and maintaining a prosecution is a complete defense to an action for malicious prosecution. Christy v Rice, 152 Mich 563, 565; 116 NW 200 (1908).
In Christy, the Court held that the trial judge erred in refusing to direct a verdict where the prosecutor conducted “his own investigation, and acted in his official capacity upon that investigation, independent of defendant’s statement.” Id. at 567-568. Unless the information furnished was known by the giver to be false and was the information on which the prosecutor acted, the private person has not procured the prosecution.
In Renda v Int’l Union, UAW, supra, the Court concluded that the trial judge erred in charging the jury that it could find liability if it found that the defendants were the “proximate cause,” id. at 91, of the prosecution, in the sense that the prosecution was a natural and probable consequence of an agreement between the private persons and an informer to pay the informer for his testimony and in refusing to charge that if the prosecutor acted on his own judgment the verdict must be for the defendants. We held that there was a total lack of evidence that the defendants by improper pressure or inducement on the prosecutor succeeded in securing the warrant for the plaintiffs arrest and that the prosecution came into being after the prosecutor’s interview and investigation of the informant.
Christy and Renda confirm two long-established rules that negate an element of plaintiff’s prima facie case. The independent exercise of prosecutorial discretion establishes that the private defendant did not initiate the prosecution. The prosecutor’s independent investigation is not in law attributable to the private defendants. The information developed by Officer Waldron was submitted to the prosecutor who authorized issuance of a warrant on grounds that established probable cause to believe that Dr. Matthews had committed a felony. Thus, Blue Cross did not initiate or maintain the prosecution as a matter of law.
Finally, there was no disputed issue of material fact regarding the existence of probable cause. A private person’s mistake of fact or law is relevant to whether he acted reasonably in initiating or maintaining a criminal proceeding. However, as noted, defendant did not initiate, continue, or maintain the prosecution. Because there was no basis for disputing that there was probable cause for the prosecution, the trial court should have resolved the question as a matter of law.
VI
In Koski, supra at 432, we recognized that the question of probable cause is an objective test that “involves only the conduct of a reasonable man under the circumstances.” The cause by which a criminal proceeding is initiated, is objectively measured. “In so doing, it was correct to view the facts, not as a legal technician would view them, but as the prudent, cautious person would see the situation.” Id. In Wilson v Bowen, 64 Mich 133, 138; 31 NW 81 (1887), we observed:
“To constitute probable cause . . ., there must be such reasonable ground of suspicion, supported by circumstances sufficiently strong in themselves to warrant an ordinarily cautious man in the belief that the person arrested is guilty of the offense charged.
“A person may have probable cause for making a criminal complaint from information received from others merely; but in such case, he must honestly believe the information there obtained to be true, and the information must be of that character, and obtained from such sources, that business men generally, of ordinary care, prudence, and discretion, would act upon it under such circumstances, believing it to be reliable. But a man’s mere belief that another is guilty is not probable cause, unless that belief is founded upon reasonable grounds of suspicion, or upon information of such a reliable kind, and from such reliable sources . . . such as would induce an impartial and reasonable mind to believe in the guilt of the accused."
Dennis Drake’s report to the state police was based on information from reliable sources, namely operating surgeons. The doctors’ statements that plaintiff’s assistance was not medically necessary and that none of them authorized him to represent that he provided surgical assistance corroborated the allegation of improper billing made by LeAnne Pierce. It was information that would cause a reasonable mind to believe in the guilt of the accused. Thus, assuming arguendo that there was evidence Drake initiated or maintained the prosecution, taken in the light most favorable to the plaintiff, there is simply no basis to conclude that a reasonable person would not have believed that Dr. Matthews probably had submitted false claims.
Plaintiff’s argument that lack of full and fair disclosure of a material fact, that fact being the policy regarding payment for technical surgical assistance under the copayment programs, is inapposite to whether plaintiff’s proofs made out a prima facie case of the absence of probable cause. Plaintiff’s burden was to show that defendant instigated the investigation or continued it and that the prosecution was based on false information. Under these circumstances, there was no disputed issue of fact that technical surgical assistance was not reimbursable at Sinai Hospital.
In King v Arbic, 159 Mich App 452, 466; 406 NW2d 852 (1987), the plaintiff filed a malicious prosecution claim against the state trooper who had signed the complaint against the defendant. The Court of Appeals upheld the trial court’s grant of summary disposition, observing that the “[defendant has invoked a traditional defense to malicious prosecution, namely, the defense of advice of counsel.” The Court of Appeals adopted the opinion of the trial court, which recognized:
In cases similar to the one we are faced with here, that legal principle reduces to the following rule: “. . . the only situation in which an action for malicious prosecution would properly lie is where a police officer knowingly swears to false facts in a complaint, without which there is no probable cause.” Belt v Ritter, 18 Mich App [495] 503 [171 NW2d 581 (1969)]. The argument supported by that rule is sometimes characterized as an attack on the first ele merit of the cause of action, that defendant instituted the previous prosecution. Alternatively, there is a good deal of case literature which views the defense as an attack on the “lack of probable cause” prong. This Court is in agreement with the Court of Appeals decision in Wilson v Yono, 65 Mich App 441, 444 [237 NW2d 494] (1975), which said, “[ajlthough the cases seem to talk in terms of probable cause, it is clear that the rule is based upon the idea that defendant has not in fact instituted the prosecution.” (Emphasis added.) See also Rivers v Ex-Cell-O Corp, 100 Mich App 824, 832-833; 300 NW2d 420 (1980).
In the final analysis then, we are brought back, quite conveniently, to a question which has already been addressed in this opinion, albeit in slightly different form. The question is this: Is there any evidence in the record, as it exists, which would give rise to the inference that defendant Arbic knowingly included false facts in his incident report, without which the prosecutor could not have concluded there was probable cause? The answer is clearly no. This question is a slightly different form of the one answered earlier regarding defendant’s lack of good faith. It has never been pled or argued by plaintiff that defendant did anything worse than fail to include certain arguably exculpatory items. In fact, those items which plaintiff has consistently labeled as “exculpatory” (i.e. that it was dark, that the victim only saw part of his assailant’s legs, etc.), are not really exculpatory in nature. An exculpatory fact would be something such as an eye witness who saw plaintiff elsewhere or the fact that plaintiff had a broken ankle on the night in question. See, e.g., Rivers, supra, pp 832-833. While the distinction is concededly a fine one, plaintiff is really arguing certain ameliorating circumstances, not exculpatory facts. This court has determined that it would place too much of a burden upon investigating police officers to require that they include all possibly mitigating items in their police reports in order to avoid potential liability. [Id. at 466-467.]
Simply stated, Dr. Matthews’ contention that the claims were reimbursable under the copayment pro- grains was, at best, a mitigating or ameliorating circumstance.
Because it was undisputed that Sinai Hospital is a teaching facility and that reimbursement for technical surgical assistance was not available under either the regular business program or the copayment programs unless the operating surgeon certified the unavailability of an “in-house” assistant, there was no nondisclosure of information that was material, and no disputed fact regarding the information on which the prosecutor relied to make his independent determination of probable cause. There being no evidence negating the existence of defendant’s reasonable belief that Dr. Matthews had submitted claims for reimbursement to which he was not entitled, the trial court erred in submitting the issue of probable cause to the jury and denying defendant’s motion for a directed verdict.
CONCLUSION
Blue Cross clearly had probable cause to believe that Dr. Matthews had probably made false claims for reimbursement. The fact that Blue Cross was aware that a policy under the copayment programs deleted the word “active,” might constitute an ameliorating circumstance bearing on whether Dr. Matthews had fraudulent intent, but it does not make false the fact that the plaintiff made claims for payment that were not reimbursable under any definition. The alteration of the surgical records was itself sufficient to raise the suspicions of any prudent businessperson. Combined with advice from the oral surgeons that Dr. Matthews provided no services and did not have their permission to make a contrary representation, a reasonable person would have concluded that Dr. Matthews probably had committed a felony. There was no evidence that the prosecution was initiated other than at the sole discretion of the prosecutor on the basis of an independent investigation. We reverse the decisions of the trial court and the Court of Appeals and remand the case for entry of judgment notwithstanding the verdict.
Mallett, C.J., and Brickley, Weaver, Kelly, and Taylor, JJ., concurred with Boyle, J.
Any person who, with intent to defraud or cheat, shall. . . or by any . . . false pretense, . . . obtain from any person any money ... or other valuable thing or service [which] shall be of the value of more than $100.00, such person shall be guilty of a felony, punishable by imprisonment in the state prison not more than 10 years or by a fine of not more than $5,000.00. [MCL 750.218; MSA 28.415.]
(1) A person shall not make or present or cause to be made or presented to a health care corporation or health care insurer a claim for payment of health care benefits knowing the claim to be false.
(5) A person who violates this section is guilty of a felony punishable by imprisonment for not more than 4 years, or by a fine of not more than $50,000.00, or both. [MCL 752.1003; MSA 28.547(103).]
Dr. Matthews’ Blue Cross physician information report indicates that he applied for a provider number and that his provider number was approved for Medicare and regular business only. Dennis Drake testified that the five surgeries in question were billed under the Blue Cross and Blue Shield regular business program in accordance with the subscriber’s contract in these claims. By signing the claim form, the physician certifies that the services were performed in accordance with the provisions of the subscriber’s contract. The Physician’s Manual, Section One — General Information, provides a copy of the Blue Cross physicians registration agreement in which the participant agrees to accept payment for covered services in accordance with the terms of the subscriber’s contract in effect at the time service is rendered.
Dennis Drake reviewed sixty claims from January, 1982, through October, 1984. Dr. Matthews admitted billing for sixty tsas from 1978 through 1985, and receiving Blue Cross payments for them as a result of filing claims.
Blue Cross and Blue Shield of Michigan Physician’s Manual, pp 2-19 through 2-20, July, 1979, describes the following services.
Surgery is defined as
A branch of medicine consisting of manual and operative procedures for diagnosis and treatment of diseases, repair of injuries (fractures or dislocations), and correction of deformities or defects which impair body functions.
* * *
Dental surgery is a benefit for multiple extractions or removal of unerupted teeth for a hospital bedpatient with a concurrently hazardous medical condition.
Oral surgery is limited to conditions not directly related to or caused by the teeth or their sockets.
Tsa benefits are payable when provided by an md or DO; it may also be payable to a dds or a dpm if the surgery falls within the scope of licensure. Blue Cross and Blue Shield of Michigan Physician’s Manual, p 2-20, July, 1979.
Physician’s Manual, p CS-1, January, 1984
Although plaintiff asserted in the civil trial that the copayment program policy “superseded” the regular business program policy, the only support for this contention was a conclusionary response by Dr. Attenson to the following question that counsel represented had been asked at the criminal trial.
Q. . . . Question: You’U agree, Doctor, that the later definition would supersede the previous definition, wouldn’t you? It just stands to simple reason right? Answer: Right. [Question:] Was that the truth when you said it in 1988 at the trial in this case?
A. If I said it, it must be true.
Obviously, because plaintiff stipulated that the prosecutor had probable cause he did not contend that the 1984 definition authorized payment of these claims as a matter of law. The Blue Cross Physician’s Manual describes different reimbursement policies and billing instructions for different programs such as regular business, cost sharing, and Medicare. Several Blue Cross employees and consultants testified that the regular business definition had not been changed or eliminated. The regular business definition of tsa was not eliminated and replaced by the subsequent definition. The regular business definition of tsa is still in place and has not changed since 1979. Plaintiff’s assertion that the 1979 definition had been “superseded” is not supported by trial testimony or documentation in the manual.
A Blue Cross audit of the five patient ledgers involved in the criminal charges did not reflect any involvement of surgery on the dates in question and failed to show any billings for consultation or tsa services that normally would appear on the billing ledgers.
Dr. Topf was interviewed because he was the chairman of the oral surgery department. He indicated that the hospital had no written policy regarding tsa benefits and that he had never had any incidents where tsa benefits were claimed. He further noted that there was no permission needed for staff to be in the operating room and staff could attend surgery at any time.
Dr. Macintosh stated in his interview with Detective Waldron that two years before the investigation, he had a conversation with Dr. Matthews about tsa fees. Dr. Matthews was told that surgical residents found it improper for Dr. Matthews to request that they add his name to their surgical reports.
A review of the Sinai Hospital surgical register and schedule of operations (surgery log) for the surgeries involved in the prosecution did not indicate Dr. Matthews’ name on any of the documents. This confirms that there was no official hospital record verifying Dr. Matthews’ attendance or assistance in any of the surgeries. Hospitals are required, as a matter of record, to document all those present and assisting in the operating room.
LeAnne Pierce described how the tsa claims were processed and how the operative reports were altered to represent Dr. Matthews’ presence and that he assisted in the surgical procedure. Each claim form sent to Blue Cross for tsa, was accompanied by an altered operative report and a seven-point summary of Dr. Matthews’ tsa services, which represented that Dr. Matthews “[w]as present in the or and served as tsa during the entire surgical procedure.” The individual patient’s name was added to a prepared form copied on the doctor’s letterhead. The form stated the following information.
For your records, in addition to the services mentioned in the Patient Operative Report, I provided the following:
1. Presurgical Study Models and Photographs, Diagnosis and Consultation.
2. Presurgical Series of Skull, Facial, and tmj x-rays and complete Intermediate Examination.
3. Presurgical Consultation with Oral Surgeon[.]
4. Presurgical impressions and Articulator Mounting of the upper and lower models for the fabrication of the Surgical Splint. Also constructed and supervised the final adjustment of the Splint prior to active placement.
5. Preoperative Consultation with the patient at the Hospital, prior to surgery.
6. Was present in the or and served as tsa during the entire surgical procedure. Determined the amount of bony advancement or retraction (and degree of surgical reduction genioplasty if necessary).
7. Complete Post-op Records.
These documents were attached together and mailed to Blue Cross after Dr. Matthews reviewed the claims for error.
The surgeons who had given statements to Detective Waldron testified in accord with the information that they had given Detective Waldron that resident doctors were available and assisted in each operation and that Dr. Matthews did not provide technical surgical assistance for the cases. Asked for a definition of technical surgical assistance, each doctor testified that technical surgical assistance had a commonly recognized meaning in the oral surgery community that required active participation in the surgical procedure.
Dr. Attenson reaffirmed the accuracy of the information he had given Waldron. Blue Cross representatives, John Gilsenan and Dr. Scott Navarro, acknowledged that dentists were eligible for tsa by licensure under the terms stated in the Blue Cross Physician’s Manual, but that it was the credentials committee of the hospital that determines whether a doctor or dentist is eligible to participate in surgical procedures. Mr. Gilsenan stated that the Physician’s Manual does not contain definitions of services per se, but descriptions of services that Blue Cross relies on to establish criterion for payment.
Jack Hill, a Blue Cross provider representative, testified that Dr. Matthews had not indicated any concern with tsa payments. Mr. Hill stated that Dr. Matthews was in possession of the Procedure Code Manual and the Physician’s Manual and that he expressed concern about not receiving updates to the manual and he directed that updates be sent to him.
If probable cause is found, the actual motive behind the complaint may not be relevant because “[i]t is a recognized rule that malice may be inferred from want of probable cause, but this is not a rule that works both ways. Want of probable cause may not be inferred from malice.” Weiden, supra at 352.
Counsel’s statement was correct to the extent that counsel was arguing that failure to disclose could be evidence of malice or that a defendant who initiates a prosecution without probable cause cannot rely on the prosecutor’s legal advice if he concealed material facts.
3 Restatement Torts, 2d, § 653, comment e, p 408.
The United States Supreme Court has recently reaffirmed this position, holding that a prosecutor is fully protected by “absolute immunity . . . when performing traditional functions” of an advocate, that is preparation of the information and motion for arrest warrant, but is protected only by qualified immunity if the prosecutor is functioning as a “complaining witness.” Kalina v Fletcher, 522 US 118,_; 118 S Ct 502, 507-508; 139 L Ed 2d 471 (1997).
3 Restatement Torts, 2d, § 653(a), comments b and c, p 407.
3 Restatement Torts, 2d, § 666, pp 433-434.
(1) The advice of an attorney at law admitted to practice and practicing in the state in which the proceedings are brought, whom the client has no reason to believe to have a personal interest in obtaining a conviction, is conclusive of the existence of probable cause for initiating criminal proceedings in reliance upon the advice if it is
(a) sought in good faith, and
(b) given after a full disclosure of the facts within the accuser’s knowledge and information.
Comment:
(a) . . . This includes a prosecuting attorney. . . .
(b) . . . The advice of counsel is chiefly important in cases in which the criminal proceedings are initiated in the mistaken belief that the conduct of which the accuser reasonably believes the accused to have been guilty constitutes, as a matter of law, the crime charged in the proceedings.
In Thompson v Price, 100 Mich 558, 560-561; 59 NW 253 (1894), Price was the complainant on a warrant that charged Thompson with neglect of duty by failing to procure a property statement from a resident taxpayer. The only witness, aside from the plaintiff, who had any knowledge regarding whether the plaintiff had tried to obtain the statement was the taxpayer, Mr. Enos. Enos testified that he did not have any recollection that he had any conversations with Price regarding the statement. While the defendant offered testimony tending to show that Enos had told another person that he was not required to furnish a tax statement, there was nothing to substantiate that the defendant had spoken to Enos personally before making the complaint. The Court observed that it is correct that reliance is a complete defense to a claim of malicious prosecution if a defendant stated all the facts to the prosecuting attorney and acted on his advice in making the complaint.
Additionally, whether the failure to disclose information negates the defense of reliance on the prosecutor’s determination of probable cause also requires the trial court to make a threshold determination regarding whether the allegedly withheld information has a material bearing on the existence of probable cause. As discussed below, Dr. Matthews was not entitled to payment under either Blue Cross program. The failure to alert the prosecutor that the word “active” did not appear in the copayment policy was not material.
See 87 ALR2d 183, § 2, pp 186-187.
The rule that the question of probable cause in an action for malicious prosecution is for the court, and not for the jury, although undoubtedly anomalous in that it substitutes the judgment of the court for that of the jury as to the reasonableness of the defendant’s conduct in the light of the admitted or established facts and beliefs, is nevertheless, except in a few jurisdictions, established, in theory at least, by the overwhelming weight of authority. The rule in its origin is probably traceable to the apprehension of the courts that if the question of probable cause were left to juries, they might not sufficiently safeguard the rights of defendants, and thus might discourage the performance of a public duty of bringing complaints against persons they believe to have committed offenses.
It is necessary in actions for malicious prosecution for criminal proceedings “to carefully delineate the functions of judge and jury, particularly in detennining probable cause.” Friedman v Dozorc, 412 Mich 1, 77; 312 NW2d 585 (1981) (Blair Moody, Jr., J, dissenting in part).
“In actions for malicious prosecution, however, upon the [issue] of . . . probable cause, the jury has only the function of finding the circumstances under which the defendant acted. The court determines whether, under those circumstances . . . the defendant had or had not probable cause. If there is no conflict in the tes timony as to what the circumstances were, the court has no need for a finding of the jury. The jury is not called upon to act unless there is a conflict in the testimony that presents an issue of fact for its determination.” [Id. at 77-78, quoting 3 Restatement Torts, 2d, § 673, comment e, pp 449-450.]
If Drake testified that the basis for his action was that Pierce told him that Dr. Matthews directed her to alter the reports, but Pierce later testified that she told Drake that Dr. Matthews had no knowledge of the alteration of the records, the question whether Pierce or Drake was telling the truth would have been for the jury.
In cases presenting a question of fact for jury determination, the preferred method for presenting the issue to the jury is suggested in Friedman, n 20 supra at 78, following the Restatement of Torts:
“The better . . . method [in determining the issue of probable cause] is to require the jury to find a special verdict setting forth the circumstances under which they find the proceedings were initiated. Upon these findings the court then determines whether the defendant had probable cause.” [Quoting 3 Restatement Torts, 2d, § 673, comment e, pp 449-450.]
As Justice Blair Moody, Jr., stated, it is “the jury [that] resolves any conflict in the underlying facts on the issue of probable cause. Once the conflict is resolved, the judge determines whether the facts as found by the jury constitute probable cause. If the facts underlying . . . reasonable belief are not in dispute, the judge decides the issue of probable cause.” We agree and find the Restatement approach preferable because it allows the jury to focus on the factual determination without worrying about how the law is to be applied. Where there is a disputed question of fact in a malicious prosecution case, the jury should determine the facts on a special verdict form and the judge should, on the basis of those facts, make the ultimate determination of probable cause as a matter of law.
See 3 Restatement Torts, 2d, § 673, pp 448-449:
(1) In an action for malicious prosecution the court determines whether
(a) the proceedings of which the plaintiff complains were criminal in character;
(b) the proceedings were terminated in favor of the plaintiff;
(c) the defendant had probable cause for initiating or continuing the proceedings;
(d) the harm suffered by the plaintiff is a proper element for the jury to consider in assessing damages.
(2) In an action for malicious prosecution, subject to the control of the court, the jury determines
(a) the circumstances under which the proceedings were initiated in so far as this determination may be necessary to enable the court to determine whether the defendant had probable cause for initiating or continuing the proceedings;
(b) whether the defendant acted primarily for a purpose other than that of bringing an offender to justice;
(c) the circumstances under which the proceedings were terminated;
(d) the amount that the plaintiff is entitled to receive as damages;
(e) whether punitive damages are to be awarded, and if so, their amount.
Plaintiff appears to contend that Drake initiated the prosecution or that he procured and maintained it because of his continued involvement throughout the case. The first proposition is incorrect as a matter of law because initiation of the prosecution is at the exclusive discretion of the prosecutor. There was no evidence of inducement or pressure or any infringement on the prosecutor’s authority in bringing or continuing the prosecution.
We employ the terms “continued or maintained” throughout this opinion in accord with the concept of “continues” as expressed in 3 Restatement Torts, 2d, § 662, p 423.
One who initiates or continues criminal proceedings against another has probable cause for doing so if he correctly or reasonably believes
(a) that the person whom he accuses has acted or failed to act in a particular manner, and
(b) that those acts or omissions constitute the offense that he charges against the accused, and
(c) that he is sufficiently informed as to the law and the facts to justify him in initiating or continuing the prosecution.
See comment on clause a-
It is the facts known or reasonably believed by the private prosecutor that determine the existence or non-existence of probable cause and not the facts which, although within the knowledge of third persons, are not communicated to him. If, in the light of the facts as he knows or reasonably believes them to be, a reasonable man would believe that the conduct of the accused was such as to make him guilty of the offense charged against him, the existence of exonerating facts is immaterial unless those facts would have been disclosed by such an investigation as the prosecutor should have made before initiating the proceedings. [Id. at 424-425.]
There was no evidence of inducement or pressure or any infringement on the prosecutor’s authority in bringing or continuing the prosecution.
See People v Carter, 379 Mich 24; 148 NW2d 860 (1967).
See Smith v Austin, 49 Mich 286; 13 NW 593 (1882).
3 Restatement Torts, 2d, § 653, comment g, p 409 states
A private person who gives to a public official information of another’s supposed criminal misconduct, of which the official is ignorant, obviously causes the institution of such subsequent proceedings as the official may begin on his own initiative, but giving the information or even making an accusation of criminal misconduct does not constitute a procurement of the proceedings initiated by the officer if it is left entirely to his discretion to initiate the proceedings or not. When a private person gives to a prosecuting officer information that he believes to be true, and the officer in the exercise of his uncontrolled discretion initiates criminal proceedings based upon that information, the informer is not liable under the rule stated in this Section even though the information proves to be false and his belief was one that a reasonable man would not entertain. The exercise of the officer’s discretion makes the initiation of the prosecution his own and protects from liability the person whose information or accusation has led the officer to initiate the proceedings.
For example, if the criminal law is used for “some collateral or private purpose, such as to compel the delivery of property or payment of a debt rather than to vindicate the law, he is guilty of a misuse of process and a fraud upon the law.’’ Hall v American Investment Co, 241 Mich 349, 353; 217 NW 18 (1928).
3 Restatement Torts, 2d, § 662, pp 424-428.
If the defendant merely states what is believed, leaving the decision to prosecute entirely to the uncontrolled discretion of the officer, or if the officer makes an independent investigation [the defendant] is not regarded as having instigated the proceeding. [Prosser & Keeton, Torts (5th ed), § 119, pp 872-873.]
3 Restatement Torts, 2d, § 653, p 406.
Commentators support this view and have been critical of injecting a subjective element into a probable cause determination. See Dobbs, Belief and doubt in malicious prosecution and libel, 21 Ariz L R 607, 609-610 (1979), and note, Changing the standards of probable cause in malicious prosecution, Bradshaw v State Farm Mutual Automobile Insurance Co, 157 Ariz 411; 758 P2d 1313 (1988), 21 Ariz St L J 1231(1989).
The United States Supreme Court has recently stated in this regard that “[ajrticulating precisely what . . . ‘probable cause’ mean[s] is not possible. [It is a] commonsense, nontechnical conception!] that deal[s] with ‘ “the factual and practical considerations of everyday life on which reasonable and pmdent men, not legal technicians, act” ’ [and] [a]s such, the standards are ‘not readily, or even usefully, reduced to a neat set of legal rules.’ ... We have cautioned that [this] legal principle]] [is] not [a] ‘finely-tuned standard]]’ comparable to the standards of proof beyond a reasonable doubt or of proof by a preponderance of the evidence. [It is] instead [a] fluid concepts that take[s] [its] substantive content from the particular contexts in which the standards are being assessed.” Ornelas, supra at 695-696.
See Proposed Rule of Criminal Procedure 6.107(E). 422A Mich 33. The subrule is consistent with FR Crim P 5.1(a) and with the great weight of state authority requiring probable cause with respect to both the offense and the defendant.
See Hall v American Investment Co, n 28 supra at 354-355.
The rule is generally accepted that in determining whether there was probable cause for the institution of a criminal prosecution, only those facts and circumstances as were known to the complainant at the time of instituting the criminal prosecution are to be considered, and not facts which subsequently appeared. The inquiry as to probable cause goes back to the commencement of the criminal prosecution, and it relates to facts then known as they then appeared.
3 Restatement Torts, 2d, § 672(2), p 446 establishes that “[i]n an action for malicious prosecution, the defendant has the burden of proving, when the issue is properly raised, that the plaintiff was guilty of the crime charged against him.”
Comment on subsection 2, p 448.
(i) The rule under which the defendant can protect himself from liability by proving that the plaintiff was guilty of the crime charged against him is stated in § 657.
Comment on § 657, p 416.
b. . . . Under the rule stated in this Section proof of the guilt of the person against whom the proceedings were instituted is a complete defense to a suit against the person who initiated them. In order to avail himself of this defense, the latter person must prove that the accused was guilty of the crime charged against him. To sustain this burden, however, he is not required to establish the guilt of the accused beyond a reasonable doubt. It is enough that all the evidence produced at the trial shows a preponderating probability of his guilt. | [
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Per Curiam.
The plaintiff insured a manufactured home that burned in 1991. As subrogee of the owners, the plaintiff sued the manufacturer. The circuit court granted summary disposition in favor of the manufacturer, relying on a statute of repose. The Court of Appeals reversed the summary disposition, but we reverse the judgment of the Court of Appeals and reinstate the summary disposition in favor of the manufacturer.
i
In 1971, Terry C. Weir and Darlene Weir purchased a manufactured home from Marlette Homes, Inc. The Weirs placed the home on their property in Jeddo, St. Clair County. To insure their home, the Weirs purchased a policy from Frankenmuth Mutual Insurance Company.
On September 18, 1991, the home burned. Frankenmuth Mutual paid $116,525.54 to compensate the Weirs for their loss, and assumed the role of subrogee.
In May 1993, Frankenmuth Mutual sued Marlette Homes and Coachmen Industries, Inc., alleging that a poorly designed vent fan had caused “electrical arcing,” which led to the fire.
The defendants moved for summary disposition. MCR 2.116(C)(7), (10). They asserted that this suit was barred by a statute of repose. MCL 600.5839; MSA 27A.5839. The motion was heard and granted by the circuit court in November 1994.
The Court of Appeals reversed the summary disposition and remanded the case to circuit court. 219 Mich App 165; 555 NW2d 510 (1996).
Marlette Homes and Coachmen have applied to this Court for leave to appeal.
n
This case involves a statute of repose, which the Legislature enacted in 1967 to protect licensed architects and professional engineers. In 1985, the Legislature amended the statute to include contractors within its coverage. The amended statute now provides:
No person may maintain any action to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained as a result of such injury, against any state licensed architect or professional engineer performing or furnishing the design or supervision of construction of the improvement, or against any contractor making the improvement, more than 6 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement, or 1 year after the defect is discovered or should have been discovered, provided that the defect constitutes the proximate cause of the injury or damage for which the action is brought and is the result of gross negligence on the part of the contractor or licensed architect or professional engineer. However, no such action shall be maintained more than 10 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement. [MCL 600.5839(1); MSA 27A.5839(1), as amended by 1985 PA 188.]
The Legislature also provided a definition of the word “contractor.”
As used in this section, “contractor” means an individual, corporation, partnership, or other business entity which makes an improvement to real property. [MCL 600.5839(4); MSA 27A.5839(4), as amended by 1985 PA 188.]
The issue is whether, by producing and placing a manufactured home, Marlette Homes is an entity that “makes” an improvement to real property.
in
The Court of Appeals correctly stated the principles that govern the analysis of a case of this sort:
The primary rale of statutory construction is to determine and effectuate the intent of the Legislature through reasonable construction in consideration of the purpose of the statute and the object sought to be accomplished. Gross v General Motors Corp, 448 Mich 147, 158-159; 528 NW2d 707 (1995). Where a statute is clear and unambiguous, judicial construction is precluded. Mino v McCarthy, 209 Mich App 302, 304; 530 NW2d 779 (1995). If judicial interpretation is necessary, the Legislature’s intent must be gathered from the language used, and the language must be given its ordinary meaning. In determining legislative intent, statutory language is given the reasonable construction that best accomplishes the purpose of the statute. Id. at 304-305. Statutes of limitation, along with statutes of repose, are construed to advance the policy that they are designed to promote. They prevent stale claims and relieve defendants of the protracted fear of litigation. Witherspoon v Guilford, 203 Mich App 240, 247; 511 NW2d 720 (1994). [219 Mich App 169-170.]
The Court of Appeals noted that the word “makes” is not defined in the statute, but cited a dictionary definition as it concluded, “[i]f we were to apply the ordinary meaning of the word ‘make’ defendant would clearly fall within the definition of contractor.” 219 Mich App 170.
Nonetheless, the Court of Appeals held that such a literal construction of the statute would produce an absurd result that was inconsistent with the purpose of the amendatory statute. The Court explained:
In expanding protection to contractors, the Legislature clearly intended to protect from never-ending liability those who are in the business of constructing improvements. The statute is meant to protect providers of individual expertise who render particularized services for the construction of improvements to particularized pieces of real property. Manufacturers of prefabricated, mass produced products were not intended to be included within the statute’s definition of contractor. Had the Legislature intended to give increased protection to manufacturers, it could have clearly so stated. Because the modular home was a mass-produced product, and Marlette provided no individualized expertise to construct a particular improvement to it, defendants are not entitled to claim the statute of repose as an affirmative defense.
[219 Mich App 172.]
IV
We disagree with the Court of Appeals conclusion that the concededly plain language of the statute is rendered inapplicable by a legislative intent to exclude the manufacturers of modular homes. In reaching this conclusion, the Court of Appeals said that a modular home is a “mass-produced product,” to which the manufacturer provides “no individualized expertise.” The Court went on, in a footnote, to discuss manufactured homes in the context of “products.” However, we can identify no bright line that causes a traditional home, constructed on the property where it will remain, to be so fundamentally different from a “manufactured” home that is largely constructed off-site. Technologies change over time, and even conventional on-site construction involves the use of important elements fabricated elsewhere (such as roof trusses).
Such uncertainties regarding legislative intent are to be resolved by applying the previously quoted rules of statutory construction. 219 Mich App 169-170. In this instance, we need not speculate about the evolving nature of the home-construction industry. We need only apply the plain language of the statute. And, as the Court of Appeals acknowledged, applying the plain meaning of MCL 600.5839(4); MSA 27A.5839(4) brings the defendants within the statutory definition of contractor.
Seeing no reason to depart from the explicit language enacted by the Legislature, we reverse the judgment of the Court of Appeals and reinstate the judgment of the circuit court. MCR 7.302(F)(1).
Mallett, C.J., and Brickley, Cavanagh, Boyle, Weaver, and Taylor, JJ., concurred.
Kelly, J., took no part in the decision of this case.
The plaintiff alleged that Coachmen was Marlette Homes’ “successor in interest,” assuming its assets and liabilities.
The Court of Appeals later denied rehearing.
The Court of Appeals explained how such a measure differs from a statute of limitation:
A statute of repose limits the liability of a party by setting a fixed time after the sale or first use of an item beyond which the party will not be held liable for defects in it or injury or damage arising from it. Unlike a statute of limitations, a statute of repose may bar a claim before an injury or damage occurs. O’Brien v Hazelet & Erdal, 410 Mich 1, 15; 299 NW2d 336 (1980); Oole v Oosting, 82 Mich App 291, 298-300; 266 NW2d 795 (1978). [219 Mich App 167, n1.]
No person may maintain any action to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained as a result of such injury against any state licensed architect or professional engineer performing or furnishing the design or supervision of construction of such improvement more than 6 years after the time of occupancy of the completed improvement, use or acceptance of such improvement. This limitation shall not apply to actions against any person in actual possession and control as owner, tenant or otherwise, of the improvement at the time the defective and unsafe condition of such improvement constitutes the proximate cause of the injury or damage for which the action is brought. [MCL 600.5839(1); MSA 27A.5839(1), as enacted in 1967 PA 203.]
The 1985 amendment also added a one-year discovery rule, and established a ten-year cutoff, beyond which all actions would be barred.
The Court of Appeals observed that the plaintiff has ceased arguing that a manufactured home is not “an improvement to real property.” Neither is there a current issue regarding the applicability of the 1985 amendment, which expanded the statute to include contractors. In this regard, the parties appear to accept the plain language of the statute:
The changes to subsection (1) made by this 1985 amendatory act shall apply only to a cause of action which accrues on or after the effective date of this 1985 amendatory act and shall not apply to a cause of action which accrues before the effective date of this 1985 amendatory act. [MCL 600.5839(6); MSA 27A.5839(6), as amended by 1985 PA 188.]
Moreover, allowing manufacturers such as defendant Marlette to claim the defense of the statute of repose would run counter to Michigan’s product liability laws. Our Legislature has provided a cause of action against manufacturers of defective products under MCL 600.2945; MSA 27A.2945. This approach would impinge on the ability of consumers to pursue remedies under the product liability statute.
The Court of Appeals cited The Random House College Dictionary (rev ed), in which the word “make” has the definition, “to bring into existence by shaping or changing material, combining parts, etc. . . . ; to produce; cause to exist; bring about.” Likewise, The American Heritage Dictionary (2d ed) says that to make is “[t]o cause to exist or happen; create . . . [t]o bring into existence by forming or modifying materials . . . [t]o create by putting together component parts.”
The statute does not make a distinction on the basis of whether a defendant offers a mass-produced product. Instead, the focus is on whether a defendant “makes an improvement to real property.” In this instance, the defendants delivered the home and placed it on a foundation on the Weir property. Thus, the plaintiff’s arguments concerning a mere manufacturer or seller of an item that later becomes an improvement to real property are inapposite. | [
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Taylor, J.
Plaintiff, individually and as the personal representative of her late husband’s estate, filed what was essentially a malpractice suit against the attorneys for the bankruptcy trustee who supervised the liquidation of her husband’s corporation. The trial court granted defendants’ motion for summary disposition with regard to all counts of the complaint. The Court of Appeals affirmed with regard to counts i-v of the complaint, but reversed with regard to count vi on the basis of its finding that, under this Court’s decision in Atlanta Int’l Ins Co v Bell, 438 Mich 512; 475 NW2d 294 (1991), plaintiff could employ the doctrine of equitable subrogation to avoid the defense of lack of privity and step into the shoes of the trustee to maintain the suit. After defendant filed a claim of appeal from this portion of the decision, plaintiff filed a cross appeal, challenging the dismissal of the other counts. We affirm in part and reverse in part because the Court of Appeals erred in invoking the doctrine of equitable subrogation under the circumstances presented in this case.
i
Plaintiffs late husband, Thomas Beaty, Jr., was the majority shareholder of B & K Hydraulic Company. In June 1986, creditors forced B & K into involuntary bankruptcy. The Beatys owned real estate in Livonia that is referred to in the record as the Mayfield property. Their title to the property was by the entirety, i.e., as husband and wife. The property was not a corporate asset that would have been reachable by B & k’s creditors. However, Thomas Beaty and plaintiff agreed to transfer the property to the corporation in July 1986 in order to increase the pool of corporate assets to enable a conversion of the petition to one for chapter 11 reorganization.
Initially, the bankruptcy court appointed B & K as the debtor in possession during the reorganization; however, in November 1987, it was agreed that defendant Robert Hertzberg would be appointed trustee. With the bankruptcy court’s approval, Hertzberg employed his own law firm, Hertzberg & Golden, P.C., to represent him in the sale of the Mayfield property under the reorganization plan.
In 1985, Thomas Beaty had purchased two $1 million life insurance policies. One policy listed plaintiff as the beneficiary, and the second “key man” policy listed B & K. After Thomas Beaty’s death, plaintiff and Hertzberg, as the trustee in bankruptcy for B & K, each submitted claims to Loyal American Life Insurance for payment on the respective policies. Loyal American denied both claims because the policies had lapsed as a result of failure to pay monthly premium installments in November 1987.
Plaintiff filed suit in circuit court to recover the proceeds on the life insurance policy in which she was the named beneficiary, and Loyal American removed the case to federal court. In this litigation, plaintiff argued that the insurance company was estopped from canceling the policy because it had previously accepted late payments in connection with those policies. After its motion for summary judgment was denied, the insurer eventually agreed to a settlement of $600,000.
Plaintiff asked trustee Hertzberg to bring an action on the other policy so that the proceeds could be added to the bankruptcy estate to avoid the sale of the Mayfield property. This Hertzberg agreed to do on a contingent-fee basis. The lawyer from Hertzberg’s firm who undertook this effort was Judith Green-stone-Miller. This suit was also brought in federal court. However, the estoppel argument was not raised. Plaintiff contends that this proved fatal to the trustee’s claim because, upon mutual motions for summary judgment, Loyal American’s motion was granted while the trustee’s motion was denied. The trustee was unsuccessful in appealing this decision.
In August 1991, plaintiff filed an amended five-count complaint in the Oakland Circuit Court against defendants for their failure to recover the insurance policy proceeds, alleging claims for breach of contract and malpractice (count i), breach of fiduciary duty (count n), and negligence (counts m-v). In August 1991, plaintiff filed a motion in the bankruptcy court to compel trustee Hertzberg to assign to plaintiff the malpractice claim against Hertzberg’s firm and to accept funds offered by plaintiff to pay the remaining creditors, thus avoiding the sale of the Mayfield property and leaving plaintiff as the sole remaining creditor of the estate.
Before the court could rule on the motion, Hertz-berg resigned as trustee because of a conflict of interest created by the suit. Stuart Gold was selected as a replacement trustee in October 1991. Plaintiff did not object to the appointment of Gold, provided he would agree to the assignment of the malpractice claim and the payoff of the other creditors. Plaintiffs motion was granted in November 1991, and the malpractice claim was assigned, expressly subject to defendants’ right to assert the defense of nonassignability of this type of claim. Plaintiff subsequently amended her complaint to add a cause of action based on the doctrine of equitable subrogation (count Vi).
In the circuit court, defendants moved for summary disposition pursuant to MCR 2.116(C)(8) and (C)(10). The court ultimately granted summary disposition for defendants with regard to all plaintiff’s claims. A divided Court of Appeals panel reversed in part. The majority affirmed the trial court’s order granting summary disposition with regard to all plaintiff’s claims, except her claim for equitable subrogation. It held that plaintiff could state a cause of action under the doctrine of equitable subrogation because the trustee would be unlikely to sue his own firm for malpractice, and that the inherent conflict of interest could form a basis for allowing the plaintiff to maintain a malpractice action against the trustee’s attorneys for the benefit of the estate. The dissent asserted that summary disposition was properly granted with regard to all plaintiff’s claims.
n
We review a grant or denial of a motion for summary disposition pursuant to MCR 2.116(C)(8) de novo. Auto-Owners Ins Co v Harrington, 455 Mich 377, 381, n 3; 565 NW2d 839 (1997). Defendant argues that the Court of Appeals erred in finding that plaintiff could invoke the doctrine of equitable subrogation to step into the shoes of the trustee and maintain a malpractice action against the attorneys for the trustee. We agree.
Generally, a legal malpractice action may be brought only by a client who feels that he has been damaged by retained counsel’s negligence. 7 Am Jur 2d, Attorneys at Law, § 249, p 268; Friedman v Dozorc, 412 Mich 1, 23-25; 312 NW2d 585 (1981). In this case, however, we are presented with the less frequently seen situation in which a third party claims that her relationship with counsel is of a nature suffi cient to justify the imposition of liability even in the absence of an attorney-client relationship. There has been a reluctance to permit an attorney’s actions affecting a nonclient to be a predicate to liability because of the potential for conflicts of interest that could seriously undermine counsel’s duty of loyalty to the client. Friedman, supra-, Atlanta Int’l, supra at 518; anno: Attorney’s liability, to one other than immediate client, for negligence in connection with legal duties, 61 ALR4th 615, § 8, pp 634-645.
Yet, this Court has recognized that an attorney’s negligence may expose him to liability to third parties under certain circumstances. One vehicle for affording relief has been the doctrine of equitable subrogation. Atlanta Int’l, supra at 522. This doctrine is best understood as allowing a wronged party to stand in the place of the client, assuming specific conditions are met. Atlanta Int’l, supra at 521-522. Those conditions are: (1) a special relationship must exist between the client and the third party in which the potential for conflicts of interest is eliminated because the interests of the two are merged with regard to the particular issue where negligence of counsel is alleged, (2) the third party must lack any other available legal remedy, and (3) the third party must not be a “mere volunteer,” i.e., the damage must have been incurred as a consequence of the third party’s fulfillment of a legal or equitable duty the third party owed to the client. Id. at 519-523; see also Senters v Ottawa Savings Bank, FSB, 443 Mich 45, 56; 503 NW2d 639 (1993), and Ramirez v Bureau of State Lottery, 186 Mich App 275, 285; 463 NW2d 245 (1990) (holding that equity will not interfere where a legal remedy is available); Auto Club Ins Ass’n v New York Life Ins Co, 440 Mich 126, 132; 485 NW2d 695 (1992), Commercial Union Ins Co v Medical Protective Co, 426 Mich 109, 117; 393 NW2d 479 (1986), and Smith v Sprague, 244 Mich 577, 579-580; 222 NW 207 (1928) (holding that equitable subrogation is not available to a “mere volunteer”). In this case, plaintiff argues that she does not run afoul of the disqualifying conditions and thus can succeed to the rights of the client, trustee Hertzberg.
As to the first condition, plaintiff contends that her interests and those of the trustee were merged with regard to recovery of the life insurance policy proceeds, that is, the parties shared an interest in maximizing the assets of the bankruptcy estate so that the potential for conflict was eliminated in that aspect of the litigation. We agree that there was such a shared interest solely with regard to recovery of the insurance policy proceeds and that, for the purposes of this test, plaintiff has shown that the first condition is satisfied.
As to the second condition, lack of any other available remedy, the facts in this case show that there was another adequate legal remedy available. Although plaintiff asserts that she did not have an alternative remedy for the negligence of Hertzberg’s firm, we conclude that indeed she did in the context of the bankruptcy proceedings. While it may be fair to say that Hertzberg had a conflict of interest because he would have been reluctant to sue his own firm for malpractice, the successor trustee, Gold, was not so burdened. Further, trustee Gold was obligated to act in the best interests of the estate and to investigate the wrongful acts of third parties that affected the bankruptcy estate. In re Doors & More, Inc, 126 Bankr 43, 45 (ED Mich, 1991). It can be assumed that, recognizing the duty, he would have done what it required.
Moreover, even without reliance on the successor trustee’s proper performance of his duties before Hertzberg’s resignation as trustee, plaintiff could have petitioned the bankruptcy court to remove Hertzberg and order a successor trustee to investigate the way in which the suit against Loyal American was handled. It is well settled that the bankruptcy court “has an obligation to ensure that professional services provided to an estate adhere to a standard of integrity.” In re Chicago Art Glass, Inc, 155 Bankr 180, 185 (ND Ill, 1993); In re Sky Valley, Inc, 135 Bankr 925, 933 (ND Ga, 1992). These options were not pursued by the plaintiff. Instead, plaintiff insisted throughout the proceeding that the malpractice claim be assigned to her and opposed the appointment of the successor trustee in the event he refused to cooperate in the assignment of the claim.
We reject plaintiffs claim that any action in the bankruptcy court would have been futile because there was rampant collusion between the trustee, the successor trustee, the creditor’s committee, and the trustee’s attorneys. Plaintiff has made no showing whatsoever that the federal courts were disinclined to deal with the situation if, in fact, it existed. On the contrary, under 11 USC 105(a), a bankruptcy court has the authority sua sponte to take any action or make “any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.” Furthermore, a bankruptcy court may, after notice and hearing, remove a trustee for cause. 11 USC 324(a); 11 USC 1104(d). There was, then, an adequate legal remedy available in the federal court, and plaintiff has failed to satisfy this condition for equitable relief.
As to the third condition, plaintiff being in a nonvolunteer status, plaintiff’s claim also falls short. The record in this case demonstrates that plaintiff’s financial contribution to the estate was voluntary. Without compulsion to do so, she transferred the Mayfield property to the estate and, by way of motion to compel the trustee to accept funds, contributed her personal assets to the estate. Plaintiff was under no duty, legal or otherwise, to contribute in this fashion to the bankruptcy estate.
Plaintiff, to avoid the import of the above analysis, cites cases holding that a person who pays the debt of another at the request of the debtor is entitled to all the rights and remedies against the debtor that were held by the original creditor. Leser v Smith, 219 Mich 509; 189 NW 38 (1922), and Smith v Sprague, supra. The cases are distinguishable because, unlike debts that may be freely assigned, a cause of action for malpractice is not assignable. Atlanta Int’l, supra at 534, n 15; Weston v Dowty, 163 Mich App 238, 240; 414 NW2d 165 (1987); Joos v Drillock, 127 Mich App 99; 338 NW2d 736 (1983). The rationale of Leser and Smith v Sprague would, at most, entitle plaintiff to the rights and remedies available to the other creditors who were paid off by her contribution to the bankruptcy estate. In no event do these cases alter the fact that plaintiff was a “mere volunteer.”
Consequently, plaintiffs claim fails on two of the three conditions set forth above: she had other legal remedies than this subrogation claim and she was a volunteer. Accordingly, we find that the Court of Appeals erred in reversing the trial court’s grant of summary disposition for defendants, because plaintiff was not entitled to assert an equitable subrogation claim.
m
On cross appeal, plaintiff argues that the lower courts erred in dismissing her claims of breach of a third-party beneficiary contract, breach of fiduciary duty, and her other negligence-based causes of action. We disagree.
Plaintiff argues that she was the third-party beneficiary of the contract between Hertzberg and his law firm to prosecute the claim against Loyal American. In a situation such as this, third-party beneficiary liability is premised on the concept that the initial attorney-client contract was so unquestionably for the benefit of the third party that that third party can maintain a suit for negligence by the attorney. Mieras v DeBona, 452 Mich 278, 300; 550 NW2d 202 (1996), quoting McLane v Russell, 131 Ill 2d 509, 514; 546 NE2d 499 (1989); see also 17A Am Jur 2d, Contracts, § 440, p 463. In our jurisprudence, this theory has not been expanded to cover a situation in which the benefit to the third party is one that is merely indirect, incidental, or consequential. Greenlees v Owen Ames Kimball Co, 340 Mich 670, 676; 66 NW2d 227 (1954); 17A Am Jur 2d, Contracts, § 443, p 467. In this situation, had the trustee prevailed in the suit against Loyal American, the only “benefit” accruing to Mrs. Beaty would have been that the proceeds from the life insurance policy would have been used to pay off the other creditors of the bankruptcy estate. This clearly is not a direct benefit to her, but to the estate. The fact that this also would have meant that the sale of the Mayfield property would not have been neces sary to pay off the same creditors does not convert the benefit from indirect to direct. Inasmuch as plaintiffs benefit was incidental or indirect, her claim is flawed.
In addition, plaintiffs complaint is fatally defective in that she failed to plead facts demonstrating her status as a named beneficiary of the contract between Hertzberg and his firm. This Court has held that in the context of a malpractice suit, a third party must provide proof of her status as an intended beneficiary of the attorney-client relationship in order to withstand summary disposition. Mieras, supra at 300; see also Ginther v Zimmerman, 195 Mich App 647, 655; 491 NW2d 282 (1992). Not only did plaintiff fail to plead facts demonstrating that she was the intended beneficiary of the attorney-client relationship, but she also conceded in her complaint that the prosecution of the claim against Loyal American “was legally premised upon the same being in the best interests of the bankruptcy estate . . . .” Consequently, the lower courts did not err when they concluded that plaintiff had not stated a cause of action under a theory of third-party beneficiary.
Having disposed of plaintiffs third-party beneficiary claim, we now turn to her assertion that defendants owed her an independent fiduciary duty. We find that there was none. To claim breach of fiduciary duty, there must be a situation in which the nonclient reasonably reposed faith, confidence, and trust in the attorney’s advice. Fassihi v Sommers, Schwartz, Silver, Schwartz & Tyler, PC, 107 Mich App 509, 515; 309 NW2d 645 (1981). As is apparent, it is unreasonable for a nonclient to repose confidence and trust in an attorney when any of the interests of the client and the nonclient are adverse. Friedman, supra at 23; Atlanta Int’l, supra at 522. Moreover, this Court has repeatedly declined to recognize a fiduciary obligation running to a potentially adverse party because such a duty would necessarily “permeate all facets of the litigation” and have a significantly deleterious effect on the attorney’s ability to make decisions for the benefit of his client. Friedman, supra at 23; see also Mieras, supra at 298; accord, Mercer v Jaffe, Snider, Raitt & Heuer, PC, 713 F Supp 1019, 1029 (WD Mich, 1989).
Here, the interests of the plaintiff were adverse to those of the estate in significant aspects of the bankruptcy litigation. This point is pivotal because, although plaintiff and the trustee shared an interest in recovering the proceeds of the insurance policy, there were also a substantial number of issues in which plaintiff and the trustee were adverse; the trustee had commenced proceedings against the estate of Thomas Beaty, of which plaintiff is the personal representative, and against plaintiff’s attorneys for improperly withholding funds and property belonging to the bankruptcy estate. The fact that plaintiff and the trustee were frequently adverse is determinative of plaintiff’s fiduciary duty claim.
It is well to recall that the trustee, and of course the attorneys for the trustee, owe a singular duty to the bankruptcy estate. They may act only for the purpose of directly benefiting the estate in bankruptcy and the creditors in general. They may not represent the interests of individual creditors or shareholders. In re Gallagher, 70 Bankr 288, 290 (SD Tex, 1987); In re Bell & Beckwith, 50 Bankr 422, 434 (ND Ohio, 1985) (“[A]s representative of the estate[,] the trustee is acting on behalf of the claims of all creditors equally and not on behalf of any individual creditor”). Accordingly, we find that the lower courts correctly determined that the trustee’s attorneys did not owe plaintiff a fiduciary duty, because that duty would not be limited to a particular issue and could create significant conflicts of interest.
Finally, we affirm the dismissal of plaintiff’s negligence-based causes of action. It is axiomatic that there can be no tort liability unless defendants owed a duty to plaintiff. Simko v Blake, 448 Mich 648, 655; 532 NW2d 842 (1995). Whether a duty of care exists because of the relationship between the parties is a question of law that is “solely for the court to decide . . . .” Murdock v Higgins, 454 Mich 46, 53; 559 NW2d 639 (1997); Friedman, supra at 22; Moning v Alfono, 400 Mich 425, 437; 254 NW2d 759 (1977). We agree with the conclusion of the lower courts that plaintiff failed to identify any duty owed to her by defendants because there was no relationship between the parties that could give rise to either a contractual or a tort-based duty.
iv
Because we hold, as a general proposition, that the doctrine of equitable subrogation may not be invoked to maintain a malpractice action under these circumstances, we find it unnecessary to address defendants’ arguments regarding plaintiff’s standing to bring this suit or her failure to obtain the approval of the bankruptcy court before filing suit. For the same reason, we need not reach the issue whether defendants’ conduct could constitute malpractice.
We reverse that portion of the Court of Appeals opinion finding that plaintiff could invoke the doctrine of equitable subrogation to maintain a malpractice suit against defendants and reinstate the decision of the trial court granting summary disposition to defendants. The extension of the doctrine of equitable subrogation is unwarranted in situations such as this, where the plaintiff had an adequate remedy in the context of the bankruptcy proceedings and voluntarily contributed the assets at issue. We affirm the dismissal of plaintiffs other causes of action.
Mallett, C.J., and Brickley, Cavanagh, Boyle, Weaver, and Kelly, JJ., concurred with Taylor, J.
214 Mich App 199; 543 NW2d 5 (1995).
Plaintiff sued Hertzberg only in his role as attorney for the trustee.
The causes of action were entitled “Negligence-privity with trustee,” “Negligence-assumption of duty,” and “Negligence-intended beneficiary.”
The trial court’s opinion did not expressly specify which subrule formed the basis for the grant; however, because it concluded that plaintiff failed “to state a claim for relief . . . against counsel for the trustee” and “failed to state a claim for equitable subrogation,” it is reasonable to infer that the grant was pursuant to MCR 2.116(C)(8).
We have recognized the applicability of equitable subrogation as a basis for a claim of attorney negligence by someone other than the client only in the context of the unique relationship among an insurer, the insured, and counsel for the insured. In Atlanta Int’l, supra at 520, n 8, we observed that “the unique tripartite insurance context presents an analytically different public policy” from that which controlled our decision in Friedman, supra. Indeed, the focus of the Court’s attention in that case was on “vindicating [the] public policy rationale that undergirds the attorney-client relationship in the insurance defense context.” Atlanta Int’l at 520. One issue framed by the parties here is whether the plaintiff meets the requirements of the doctrine of equitable subrogation. While we do not discern any significant unique public policy considerations similar to those presented in Atlanta Int’l, in accordance with the parties’ submissions, we consider whether equity requires application of the doctrine by examining whether plaintiff meets the conditions set out as justifying application of the doctrine in Atlanta Int’l. Our analysis here should not be interpreted as implicitly authorizing expansion of the doctrine’s application to attorney negligence cases outside the insurance defense context.
It should be noted that federal bankruptcy law expressly permits a trustee, with the approval of the bankruptcy court, to act as his own attorney. 11 USC 327(d). Opening the door to liability only when the trustee chooses to act as his own attorney, as suggested by the Court of Appeals decision, n 1 supra at 206-207, runs the risk of creating a conflict between state and federal law by interfering with the trustee’s decision and the bankruptcy court’s autonomy in this regard.
This point illustrates the way in which plaintiffs reliance on our holding in Atlanta Int’l, supra, is misplaced. In contrast to plaintiff in this case, the insurance company in Atlanta Int’l had a legal obligation to provide the insured with a defense under the terms of the insurance policy. Id. at 519.
Thus, if plaintiff had, at the trustee’s request, given the trustee the funds to pay off a particular creditor’s claim against the bankruptcy estate, then under the holding of Leser, supra, she would be entitled to stand in the shoes of that creditor. However, plaintiff asks here for something entirely different. | [
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Cavanagh, J.
This case requires us to decide whether the denial of a permit to fill wetlands on the plaintiffs’ property constitutes a regulatory taking of the property without just compensation. On two separate occasions, plaintiffs applied to the Department of Natural Resources for a permit to fill wetlands on a portion of their property so that they could commercially develop the land. Both permits were denied, and the plaintiffs filed the instant action, claiming that the permit denials constituted a regulatory taking of their land. The trial court found that the permit denials effectively rendered part of the plaintiffs’ land worthless; therefore, the DNR was required to compensate the plaintiffs. The Court of Appeals affirmed. We granted leave, and we now reverse in part and remand the case to the trial court.
i
Plaintiffs J.F.K. Company and Resorts and Company own eighty-two acres of property near M-59 in Waterford Township. J.F.K. is a Michigan limited partnership, consisting of the five children of Joseph and Elaine Kosik. Resorts and Company is a Michigan copartnership, consisting of Wisconsin Resorts, Inc., and J.F.K. K & K Construction, Inc., is a Michigan corporation. Mr. Kosik and his son are the sole shareholders of K & K. It has no ownership interest in the property, but it has contracted with the owners to build a C.J. Barrymore’s restaurant and sports complex on the property.
Mr. and Mrs. Kosik originally acquired the property in question during 1976. The property was transferred to J.F.K. by quitclaim deed in 1986 so J.F.K. could develop the land. The Kosiks retained a reversionary interest in part of the property, conditioned upon J.F.K’s ability to obtain financing for the project. Resorts and Company obtained its interest in the property about the same time.
The trial court found that the property consists of four defined parcels, all of which are contiguous. Parcel one consists of approximately fifty-five acres, twenty-seven acres of which are wetlands. It is zoned for commercial use. Parcel two (sixteen acres) is directly south of parcel one. It contains a small portion of the wetlands. Parcel three (9.34 acres) is directly south of parcel two, and does not contain any wetlands. Parcel four (3.4 acres) borders the south side of parcel one, and the east side of parcel two. It is also free of wetlands. Parcels two, three, and four are zoned for multiple family residential housing (R-2). Parcel three has already been developed; parcels two and four have not been developed.
Plaintiffs’ original plan, referred to as the “Barrymore Plan,” was to build a restaurant and sports complex on forty-two acres of parcel one, and several multiple-family residential structures with a storm-water retention pond on parcels two and four. Pursuant to this plan, plaintiffs applied for a permit to fill part of parcel one in June 1988. The dnr denied the permit, finding that approximately twenty-eight acres of the property were protected wetlands under the Wetland Protection Act (wpa), MCL 281.701 el seq.; MSA 18.595(51) et seq., since repealed and replaced. Plaintiffs did not file an administrative appeal. Instead, they filed the instant action in December 1988. In May 1990, plaintiffs submitted a second application for a permit to fill approximately three acres of wetland, while mitigating the fill by converting five acres of upland to wetland. This second application, referred to as the “Goga Plan,” would have developed the primarily upland ring around the wetland, while leaving most of the wetland intact. The second permit was also denied, and again no administrative appeal was taken.
The case was tried in December 1991. The only issue before the court was whether the permit denials constituted takings of the plaintiffs’ property. The trial court held that parcel one was the only property relevant to the taking analysis, and that denial of the permit to construct the restaurant and sports complex effectively rendered plaintiffs’ property commercially worthless. The DNR was required to compensate plaintiffs for the full value of their property.
Once faced with a substantial adverse judgment, the dnr attempted to mitigate the loss in value of the property by allowing development to commence under the “Goga Plan.” Even so, the trial court held that the DNR owed plaintiffs damages both for a “temporary” taking of the land that could now be developed under the Goga Plan, and also for the full value of the wetlands that were not usable under the Goga Plan. The trial court ultimately decided that the dnr was hable for approximately $3.5 million plus interest for the unusable interior wetlands, and approximately $500,000, plus interest for the temporary taking. The Court of Appeals affirmed the trial court’s judgment. 217 Mich App 56; 551 NW2d 413 (1996).
n
The Fifth Amendment of the United States Constitution provides in part: “nor shall private property be taken for public use, without just compensation.” Similarly, the Michigan Constitution provides:
Private property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law. Compensation shall be determined in proceedings in a court of record. [Const 1963, art 10, § 2.]
The United States Supreme Court has recognized that the government may effectively “take” a person’s property by overburdening that property with regulations. As stated by Justice Holmes, “[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.” Pennsylvania Coal Co v Mahon, 260 US 393, 415; 43 S Ct 158; 67 L Ed 322 (1922). 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. Keystone Bituminous Coal Ass’n v DeBenedictis, 480 US 470, 485; 107 S Ct 1232; 94 L Ed 2d 472 (1987).
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 eco nomically beneficial or productive use of land,” Lucas v South Carolina Coastal Council, 505 US 1003, 1015; 112 S Ct 2886; 120 L Ed 2d 798 (1992); or (b) a taking recognized on the basis of the application of the traditional “balancing test” established in Penn Central Transportation Co v New York City, 438 US 104; 98 S Ct 2646; 57 L Ed 2d 631 (1978).
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. Lucas, supra at 1015. 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 . . . .” Id. at 1019 (emphasis in original). 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. Penn Central, 438 US 124.
The trial court found that the wpa had effectively eliminated the economically viable use of plaintiffs’ land; therefore, plaintiffs were due compensation for a taking of their property. Significantly, the trial court only considered the effect of the regulations on parcel one of plaintiffs’ property, finding that parcel one was the only relevant parcel for the taking analysis. The Court of Appeals upheld the award of damages to the plaintiffs for a taking. It held that the WPA eliminated all economically viable use of the plaintiffs’ land, which meant that plaintiffs could recover categorically for the taking under the United States Supreme Court’s decision in Lucas.
m
Before we decide whether the regulations imposed on plaintiffs’ property constitute a taking, we must first address an important preliminary matter. The first step in our analysis is to determine which parcel or parcels owned by plaintiffs are relevant for the taking inquiry. The determination of what is referred to as the “denominator parcel” is important because it often affects the analysis of what economically viable uses remain for a person’s property after the regulations are imposed. Plaintiffs urge us to focus our analysis only on parcel one, while defendant argues that we must look at all four of plaintiffs’ parcels as a single unit.
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. Keystone, 480 US 498; Korby v Redford Twp, 348 Mich 193, 198; 82 NW2d 441 (1957). Courts should not “divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated.” Penn Central, 438 US 130. 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. Bevan v Brandon Twp, 438 Mich 385; 475 NW2d 37 (1991). In Bevan, the plaintiffs purchased two contiguous lots of land separately. The plaintiffs were only allowed to build a single house on the two lots because of township land-use ordinances adopted after they had purchased the property. The plaintiffs sued, claiming that the regulations constituted an unconstitutional taking of their property. The lower courts agreed with them, finding that the regulation of the property constituted a regulatory taking of one of plaintiffs’ two parcels. This Court reversed, stating:
As a general rale, a person’s property should be considered as a whole when deciding whether a regulatory taking has occurred. 1 Rathkopf, Zoning and Planning, § 6.07(5), p 6-45.
This Court has recognized that contiguous lots under the same ownership are to be considered as a whole for purposes of judging the reasonableness of zoning ordinances, despite the owner’s division of the property into separate, identifiable lots. [438 Mich 393-395.]
The Court refused to apply the taking analysis to only one of the two lots; instead, it viewed the property “in its entirety.” Id. at 397.
In the present case, the Court of Appeals noted that plaintiffs’ parcels were contiguous, just as those in Bevan. However, the Court found Bevan distinguishable because the property in that case concerned two parcels under the same ownership and subject to a single-zoning scheme. 217 Mich App 65. While we recognize that this case is not factually the same as Bevan, the principles underlying the decision in Bevan require us to conclude that the denominator parcel is more than just parcel one of plaintiffs’ property. The relevant denominator in this case includes at least parcels one, two, and four.
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 it is neither realistic nor fair to consider only parcel one for purposes of the taking analysis. Parcels one, two, and four are bound together through their contiguity, the unity of J.F.K’s ownership interest in all three of these parcels, and plaintiffs’ proposed comprehensive development scheme. Thus, the Court of Appeals erred when it concluded that it was proper for the trial court to consider only parcel one in the taking analysis.
First, there is no dispute that parcels one, two, and four are contiguous. Second, J.F.K. had an ownership interest in parcels one, two, and four. At the time the instant litigation was started, as well as when the permits were submitted to and denied by the DNR, J.F.K. was the title owner of all three parcels of property. As explained in Bevan, contiguity and common ownership create a common thread tying these three parcels together for the purposes of the taking analysis.
Third, the connection between parcels one, two, and four is further solidified by plaintiffs’ comprehensive development plans. The plaintiffs’ proposed use of the property is highly relevant to establishing the denominator parcel. Where “a property owner treats a series of properties as one income-producing unit, the value lost to the claimant is not simply the loss of the segregated parcel affected by the Government action,” rather it is the loss as it relates to the value of the entire unit. Forest Properties, Inc v United States, 39 Ct Cl 56, 73-74 (1997). Both permit applications filed by plaintiffs with the dnr contemplated a comprehensive development using part of parcels one, two, and four. In a similar situation, the United States Court of Claims held that a plaintiff may not separate a certain lot of property from others that he owned with regard to his taking claim when he had previously treated them as “a single parcel for purposes of purchase and financing.” Ciampitti, supra at 320. Indeed, it is inappropriate to allow a person to “sever the connection he forged when it assists in making a legal argument.” Id. Here, the plaintiffs forged a connection between parcels one, two, and four through the proposed development scheme and permit applications. It would be inappro priate to allow plaintiffs to sever this connection now that it makes their legal argument stronger.
Finally, the reliance of the Court of Appeals on Loveladies Harbor, Inc v United States, 28 F3d 1171 (CA Fed, 1994), is misplaced. In Loveladies, the plaintiffs agreed to convey 38.5 acres of wetland to the state in return for a permit to develop the remaining 12.5 acres of their land. However, the plaintiffs were denied a federal permit to fill the 12.5 acres on the basis of the state’s recommendation to the Army Coips of Engineers that the permit be denied. In the subsequent action, the defendants argued that the court should consider all fifty-one acres of the plaintiffs’ property for the taking analysis, not just the 12.5 listed in the permit application. The court rejected the defendants’ argument, explaining that it was illogical to “require Loveladies to convey to the public the rights in the 38.5 acres in exchange for the right to develop 12.5 acres, and then to include the value of the grant as a charge against the givers.” Id. at 1181. Similarly, it seems illogical in this case for J.F.K. to apply for permits to develop parcels one, two, and four, and then for the Court to consider only parcel one in the taking analysis.
We conclude that the lower courts erred in limiting their analysis of the taking claim to parcel one. In this case, the plaintiffs proposed a comprehensive development, using parts of parcels one, two, and four of the property. The taking claim is based on the dnr’s refusal to issue permits to allow this comprehensive development. Thus, this case is analogous to Bevan, supra. At the least, all three of plaintiffs’ parcels of property should be considered in the taking analysis.
We note that defendant has urged us also to include parcel three as part of the denominator parcel. Parcel three is contiguous with the other parcels in this case, and J.F.K. does have an ownership interest in parcel three. However, the record is unclear with respect to the extent of J.F.K.’s ownership interest in parcel three. More importantly, parcel three was not included in plaintiffs’ development plan; it had previously been developed.
However, this should not end the inquiry. The failure to include a parcel of land in a development plan should not, by itself, exclude that parcel from consideration as part of the denominator. To so conclude would encourage piecemeal development. Thus, while we can safely state that the denominator parcel includes parcels one, two, and four, we believe it is inappropriate to conclude one way or the other with regard to parcel three. On remand, we instruct the trial court to determine the extent of J.F.K.’s ownership interest in parcel three, and whether it is sufficiently connected to the other parcels to conclude that all four parcels should be considered in the taking analysis.
rv
Next, we address the Court of Appeals conclusion that the regulation of plaintiffs’ land constituted a regulatory taking. As explained in part n, a regulatory taking exists when: (1) the regulation fails to advance a legitimate state interest, or (2) the regulation denies an owner economically viable use of his land. This second type of taking is subdivided into: (a) a categorical taking, or (b) a taking recognized on the basis of the application of the traditional balancing test. Because plaintiffs concede that the state has a legitimate interest in protecting and preserving wetlands, the first type of taking is not at issue. Thus, we limit our analysis to whether plaintiffs were deprived of economically viable use of their land, either by a categorical taking or under the balancing test.
A. CATEGORICAL TAKING
When considering only parcel one, the Court of Appeals concluded that the regulation of plaintiffs’ property constituted a categorical taking of their land. However, when we expand our consideration of plaintiffs’ property to include at least all of parcels one, two, and four, it is clear that there was not a categorical taking of plaintiffs’ property.
For a categorical taking to exist, there must be a denial of “all economically beneficial or productive use of land.” Lucas, supra at 1015. In Lucas, the plaintiff purchased two lots of land approximately three hundred feet from a beach, with plans to build single-family houses on the property. A subsequent revision of South Carolina’s Coastal Tidelands & Wetlands Act thwarted the plaintiff’s planned construction, and prevented him from developing the land in any way. This led the Court to conclude that “when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.” Id. at 1019 (emphasis in original). The fact that the property owner must be completely deprived of economically beneficial use of his property was emphasized in a footnote responding to Justice Stevens’ dissent:
Justice Stevens criticizes the “deprivation of all economically beneficial use” rale as “wholly arbitrary,” in that “[the] landowner whose property is diminished in value 95% recovers nothing,” while the landowner who suffers a complete elimination of value “recovers the land’s full value.” Post at 1064. This analysis errs in its assumption that the landowner whose deprivation is one step short of complete is not entitled to compensation. Such an owner might not be able to claim the benefit of our categorical formulation, but, as we have acknowledged time and again, “[t]he eco nomic impact of the regulation on the claimant and . . . the extent to which the regulation has interfered with distinct investment-backed expectations” are keenly relevant to takings analysis generally. [Penn Central, 438 US 124.] [Id. at 1019, n 8.]
Unlike the property in Lucas, plaintiffs’ land in the present case was not left economically idle. In Lucas, the plaintiff was completely prohibited from developing any part of his land. Here, however, plaintiffs were not prohibited from developing the remaining upland on parcel one, as well as almost all of parcels two and four. Indeed, plaintiffs’ second permit application clearly contemplated such development. While the commercial value of the land may have been reduced by the restrictions placed on it by the wpa, it was not rendered worthless or economically idle.
B. THE BALANCING ANALYSIS
As Lucas indicates, regulations that do not rise to the level of a categorical taking may still be so burdensome as to rise to the level of a taking. Id. at 1019-1020, n 8. Therefore, plaintiffs must prove a taking on the basis of the balancing analysis. As explained in part n, this requires an “ad hoc, factual inquir[y]” into three factors: (1) the character of the governmental action, (2) the economic effect of the regulation on the claimant, and (3) the extent to which the regulation interfered with distinct investment-backed expectations. Penn Central at 124. While there is no set formula for determining when a taking has occurred under this 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.” Bevan, 438 Mich 391, citing Keystone Bituminous Coal Ass’n v DeBenedictis, 480 US 497.
In the present case, the trial court made several findings of fact with regard to the economic effect of the wpa on parcel one. However, it failed to take into consideration the value of the property when it included parcels two and four. We do not know the value of all three parcels combined, either with or without the regulations. It would be imprudent to decide whether there was a taking of plaintiffs’ property on the basis of an inadequate record. Therefore, we reverse the decision of the Court of Appeals, and remand the matter to the trial court for further consideration. On remand, the trial court should compare the value removed from the plaintiffs’ land, and also calculate what value remains. It then must reevaluate the case under the three-part balancing test.
v
The decision of the Court of Appeals is reversed and the case is remanded to the trial court. On remand, the trial court must determine (1) if parcel three of plaintiffs’ property should be included in the denominator parcel, and (2) whether the effect of the regulations on the entire denominator parcel resulted in a taking under the balancing test.
Mallett, C.J., and Brickley, Boyle, Weaver, and Kelly, JJ., concurred with Cavanagh, J.
Taylor, J., took no part in the decision of this case.
Two portions of parcel one have already been developed. The J.F.K. office building has been built on part of the parcel that borders North Oakland Boulevard, and a Ram’s Horn restaurant has been developed and sold from a portion of the land that borders M-59.
The trial court was required by statute to give defendant the option of mitigating its damages. MCL 324.30323; MSA 13A.30323 states that once the court has determined that the department’s actions constitute a taking, the court shall order the department, at the department’s option, to do one or more of the following:
(a) Compensate the property owner for the full amount of the lost value.
(b) Purchase the property in the public interest . . .
(c) Modify its action or inaction with respect to the property so as to minimize the detrimental affect to the property’s value.
The Fifth Amendment’s Taking Clause is applied to the states through the Fourteenth Amendment. Penn Central Transportation Co v New York City, 438 US 104, 122; 98 S Ct 2646; 57 L Ed 2d 631 (1978).
Lucas was decided only a few months before the trial judge issued his opinion in the instant case, and the opinion does not discuss the categorical-taking standard. However, the Court of Appeals found the categorical-taking analysis applicable on the basis of the trial court’s findings.
The trial court recognized the fact that J.F.K. is the titled property owner of parcel one. However, it found that there was an “equitable lien on the title to the property in favor of Mr. and Mrs. Kosik.” At the very least, the record indicates that J.F.K. shares a joint ownership interest in the property with Mr. and Mrs. Kosik. We find this joint ownership interest, combined with the fact that J.F.K. was the sole titled owner of the property at the time that the alleged taking occurred, sufficient to create a common ownership interest in all of parcels one, two, and four.
We acknowledge that these three parcels of property do have different zoning classifications. However, the fact that plaintiffs intended to use all three of them in a single development plan negates the fact that they were zoned differently, in this case. See Zealy v City of Waukesha, 201 Wis 2d 365; 548 NW2d 528 (1996) (although zoning changes by the city resulted in three different zoning classifications on the plaintiff’s parcel of land, the entire 10.4 acres of the parcel were considered relevant to the taking analysis rather than the 8.2 acres that were rezoned).
The first permit filed with the dnr does not clearly state how many acres of plaintiffs’ property were going to be involved in the development. However, there was testimony at trial explaining that along with the construction of the C.J. Barrymore’s restaurant and sports complex on parcel one, plaintiffs planned on building a storm-water retention pond and multiple-family residential structures on parcels two and four. The second permit application also contemplated using parcels two and four as part of the development. It described the proposal as “development of a 72.2 acre parcel which includes commercial, general office, multiple housing and senior citizen congregate care facilities.”
Just as in the case at hand, the plaintiff’s suit in Forest Properties was for the taking of 5.4 acres of lake bottom property when their permit application described the project as “53.36 acres existing plus 5.4 acres lake bottom.” Forest Properties at 74. The Court of Claims found this as evidence of the unity of “development and the economic expectations” of the plaintiff. Id.
In this case, two parts of parcel one as originally purchased have been developed. Defendant argues that the trial court failed to consider these two parcels in its ruling on the value of parcel one, but it is unclear from the trial court’s opinion whether this was the case. We see no reason for these two parts of parcel one to be excluded from the taking analysis. They were both part of parcel one as originally purchased, and neither was sold or developed before the enactment of the regulations in question. See Blue Water Isles Co v DNR, 171 Mich App 526, 536; 431 NW2d 53 (1988) (two parcels sold to a third party before regulatory action was considered in taking analysis).
There is no single set of factors or “test” that the trial court should apply when determining the extent of the denominator parcel. Obviously the extent of plaintiffs’ ownership interest in the relevant parcels, the contiguity of the parcels, and the extent to which the parcels have been treated as a single unit should all be considered. Some other factors that may be instructive include: whether the relevant parcels were part of the original parcel purchased, see Ciampitti, Blue Water Isles Co, and Loveladies Harbor, supra; the date of the parcels’ purchase and the extent of development relative to the date of enactment of the challenged regulations, Loveladies Harbor, supra; and the zoning of the parcels, Bevan, supra.
See Harkings v Dep't of Natural Resources, 206 Mich App 317, 324; 520 NW2d 653 (1994) (“the wpa unquestionably advances a legitimate state interest”).
SC Code, § 48-39-10 et seq.
Even if we did limit our analysis to parcel one, the Court of Appeals conclusion that a categorical taking had occurred is not supported by the record. In its first opinion, the trial court stated: “While it is true that some financial value will remain, this Court finds that what little economic value remains is but a small fraction of the economic value the property would have if all of it could be developed.” (Emphasis added.) Thus, while the regulations may have diminished the value of plaintiffs’ land, this diminution in value would not give rise to a categorical taking. Instead, it should be analyzed under the traditional case-specific inquiry. | [
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YOUNG, J.
Plaintiffs, property owners in the city of Saginaw, brought suit to challenge the validity of two city ordinances that ban the discharge of firearms and the discharge of arrows by bows within city limits. Plaintiffs claim that, because neither ordinance contains a hunting exception, the ordinances conflict with and are preempted by MCL 324.41901, a statute that gives the Michigan Department of Natural Resources (DNR) the authority to regulate and prohibit the discharge of firearms and bows under certain circumstances.
However, because plaintiffs have not made the requisite showing that their property is a hunting area “established under” part 419 of the Natural Resources and Environmental Protection Act, MCL 324.41901 et seq., there is no need to determine whether defendants’ ordinances are preempted by the statute. Moreover, the administrative rule promulgated by the DNR to administer part 419, Mich Admin Code, R 299.3048, pertains only to townships, not cities such as defendant city of Saginaw. We therefore affirm the judgment of the Court of Appeals, although for different reasons.*
I. FACTS AND PROCEDURAL HISTORY
Plaintiffs own a 56-acre parcel of property located in the city of Saginaw. Plaintiffs claim that the property has been used for hunting for many years.
In 1999, defendant city of Saginaw enacted Saginaw Ordinances, title IX, § 130.03(D), which prohibits the discharge of firearms within the city. The ordinance contains four exceptions, but does not provide an exception for hunting. Subsequently, in 2002, defendant enacted Saginaw Ordinances, title IX, § 130.02, which prohibits the discharge of many types of projectiles, including arrows “by use of any bow ... .” This ordinance contains no exceptions.
In 2003, plaintiff Michael Czymbor sought a hunting permit from the DNR. However, according to plaintiffs’ affidavit, the DNR denied plaintiff a hunting permit because the DNR “understood that hunting was not allowed” on plaintiffs’ property as a result of defendants’ ordinances. The DNR further indicated to plaintiff that it would issue hunting permits in the future if the city ordinances are repealed and “hunting is restored to the property.”
Plaintiffs filed an action for a declaratory judgment and a motion for a temporary restraining order, challenging the validity of the two ordinances because neither contained an exception for hunting. Plaintiffs claimed that the ordinances were invalid to the extent that they interfered with lawful hunting activity. Because the DNR was granted the authority to regulate or prohibit the discharge of hunting weapons under MCL 324.41901, plaintiffs argued that the statute preempted the ordinances.
Subsequently, defendants filed a motion for summary disposition pursuant to MCR 2.116(C)(8) and (10), contending that the ordinances were enacted as a valid exercise of the city’s police power under the Home Rule City Act, MCL 117.1 et seq. Moreover, defendants claimed that § 41901 did not preempt the city ordi nances because the regulation of the discharge of weapons was a subject area that was separate and distinct from the regulation of hunting. The trial court granted defendants’ motion for summary disposition, concluding that the statute did not preempt the local ordinances because the ordinances did not regulate the same area as the statute.
In a published opinion, the Court of Appeals affirmed the judgment of the lower court, holding that the city ordinances were not preempted by MCL 324.41901. The panel noted that state law preempts a municipal ordinance where either a direct conflict exists between the enactments, or where the statute completely occupies the field that the ordinance attempts to regulate. Because no direct conflict existed, the panel analyzed the “field preemption” issue, concluding that the statute did not preempt the ordinances because “firearm control is a subject distinct from the field of hunting control” and that defendant city had authority as a home rule city to enact measures to assure public peace and safety.
Plaintiffs sought leave to appeal in this Court, arguing that the city’s antidischarge ordinances were preempted by state law. This Court granted leave to appeal. Subsequently, after oral argument, we directed the parties and amicus curiae DNR to file supplemental briefs.
II. STANDARD OF REVIEW
Resolution of the issue presented in this case involves the interpretation of MCL 324.41901. Statutory interpretation is a question of law that we review de novo. ***8 Moreover, this Court reviews the decision to grant or deny summary disposition de novo.
III. ANALYSIS
A. THE STATUTE
Part 419 of the Natural Resources and Environmental Protection Act, entitled “Hunting Area Control,” consists of five statutory provisions. The statute at issue, MCL 324.41901, provides, in relevant part:
(1) In addition to all of the department powers, in the interest of public safety and the general welfare, the department may regulate and prohibit hunting, and the discharge of firearms and bow and arrow, as provided in this part, on those areas established under this part where hunting or the discharge of firearms or bow and arrow may or is likely to kill, injure, or disturb persons who can reasonably be expected to be present in the areas or to destroy or damage buildings or personal property situated or customarily situated in the areas or will impair the general safety and welfare. In addition, the department may determine and define the boundaries of the areas. Areas or parts of areas may be closed throughout the year. The department, in furtherance of safety, may designate areas where hunting is permitted only by prescribed methods and weapons that are not inconsistent with law. When ever the governing body of any political subdivision determines that the safety and well-being of persons or property are endangered by hunters or discharge of firearms or bow and arrows, by resolution it may request the department to recommend closure of the area as may be required to reheve the problem. [Emphasis added.]
The clear language of § 41901 grants the DNR the authority to “regulate and prohibit” the discharge of firearms and bows and arrows, but that authority is limited to “those areas established under this part....” (Emphasis added.) In this case, plaintiffs have made no showing that their property is an area “established under” part 419. Because plaintiffs have not made the requisite showing, there is no basis to conclude that the statute is applicable to plaintiffs’ property.
In their supplemental briefs, plaintiffs and the DNR maintain that plaintiffs’ property need not be “established” under part 419 because the DNR has the “exclusive authority to regulate the taking of game” under MCL 324.40113a(2), and that hunting on private land is generally permitted everywhere, subject to the permission of the landowner. However, the issue before us today is not where hunting is permitted. Rather, the issue before us is the applicability of MCL 324.41901.*
The plain language of the statute requires that property be “established under” part 419 before the regulatory provisions of § 41901 apply. In other words, the DNR’s authority to regulate the discharge of weapons on property under § 41901, and any potential reciprocal limitation on the city of Saginaw’s ability to prohibit the discharge of weapons within its city limits, exists only to the extent that the subject property has been “established under” part 419. While the DNR enjoys “the exclusive authority to regulate the taking of game,” MCL 324.40113a(1), there is no indication that the legislative grant of authority to regulate the taking of game is superior to or supersedes the specific legislative grant of authority at issue here — the authority to regulate the discharge of weaponry. In any event, the DNR cannot exceed the authority granted by the Legislature to regulate the discharge of weaponry under MCL 324.41901. Moreover, while the DNR’s interpretation of the statute is given some measure of deference, its construction cannot conflict with the plain language of the statute, which requires that property be “estab lished under” part 419 before the regulatory provisions of § 41901 are applicable.
Because plaintiffs have not shown that their property is “established under” part 419 of the Natural Resources and Environmental Protection Act, there is no basis to conclude that the statute is applicable, thus eliminating the need to decide whether defendants’ ordinances are preempted by MCL 324.41901.
B. THE ADMINISTRATIVE RULE
Additionally, while not discussed by the parties or the DNR, we also note that the current administrative rule promulgated by the DNR to administer part 419 applies to townships but not to cities such as defendant. Thus, even if plaintiffs could show that their property was “established under” part 419, which they cannot, the administrative mechanism currently in place would not apply.
Mich Admin Code, R 299.3048 provides:
(1) The hunter area control committee was created by section 1 of Act No. 159 of the Public Acts of 1967. It is composed of a representative of the department of natural resources, a representative of the department of state police, the township supervisor, and a representative of the sheriffs department of the counties involved.
(2) The committee selects a chairman from its members who serves for a year, then alternates with a member from another agency. The department of natural resources performs clerical, operational, and administrative duties of the committee. Expenses incurred are borne by the member’s department. Costs of surveys and actions outside the committee and the sheriffs department are borne by the department of natural resources.
(3) In the interest of public safety and the general welfare, the committee may regulate and prohibit hunting and the discharge of firearms and bow and arrow on those areas where hunting or the discharge of firearms or bow and arrow may or is likely to kill, injure, or disturb persons who reasonably can be expected to be present in the areas or to destroy or damage buildings or personal property situated or customarily situated in such areas or will impair the general safety and welfare. The committee may determine and define the boundaries. Areas may be closed throughout the year or parts thereof. The committee, in furtherance of safety, may designate areas where hunting is permitted only by prescribed methods and weapons not inconsistent with law. [Emphasis added.]
While the administrative rule was originally promulgated to administer the predecessor statute to MCL 324.41901, there is no indication that the current rule does not remain in full effect. Justice Weaver’s dissent claims that reading Rule 299.3048 according to its plain language is contrary to “a plain reading of part 419.” Post at 369. However, nothing in part 419 describes or requires any particular mechanism of implementation. Rather, a “plain reading of part 419” indicates that the mechanism of implementation is left to the discretion of the DNR. Here, it is clear that the DNR has chosen to administer MCL 324.41901 by means of Rule 299.3048.
IV CONCLUSION
The actions of the DNR throughout these proceedings have been, to say the least, contradictory. Initially, the DNR refused to issue hunting permits to Michael Czymbor solely because of the existence of defendants’ discharge ordinances. However, the DNR now claims that these same ordinances are invalid to the extent that they do not provide a hunting exception, because only the DNR may prohibit the discharge of weaponry in hunting areas under MCL 324.41901. Moreover, the department claims that areas need not be established under part 419, despite the clear language of MCL 324.41901, because its “exclusive authority to regulate the taking of game” under § 40113a(2) obviates the need to comply with the requirements of § 41901. Additionally, the DNR has failed to acknowledge the existence or effect of Rule 299.3048. Certainly, if the DNR no longer wishes to acquiesce to defendants’ antidischarge ordinance, it is free to take the necessary steps to amend its administrative rules to conform to the view it urges in its briefs. It may not, however, simply ignore the language of MCL 324.41901 or the requirements of the Administrative Procedures Act.
The judgment of the Court of Appeals granting summary disposition to defendants is affirmed, although for an alternative rationale.
Taylor, C.J., and Corrigan and Markman, JJ., concurred with Young, J.
In affirming the judgment of the Court of Appeals, we do not address and take no position on the Court of Appeals preemption analysis.
The ordinance provides:
(1) Discharge Prohibited. It shall be unlawful for any person to discharge a firearm in the City.
(2) Exceptions. It shall not be a violation of this section to discharge a firearm under the following conditions:
(a) In the protection of life;
(b) Law enforcement officers in the performance of their duties;
(c) An established and lawfully permitted educational program properly supervised;
(d) Military functions, such as parades, funerals, firing blank charges.
The ordinance provides that “[n]o person shall discharge or propel any arrow, metal ball, pellet or other projectile by use of any bow, long bow, cross bow, slingshot or similar device within the City limits.”
Czymbor’s Timber, Inc v City of Saginaw, 269 Mich App 551; 711 NW2d 442 (2006).
Id. at 559.
475 Mich 909 (2006).
477 Mich 1277 (2007). Specifically, we directed the parties and amicus curiae to address "(1) whether privately owned land is generally open for hunting with the permission of the owner unless a local government has taken steps to close the land and, if so, what, if any, other procedures exist in addition to MCL 324.41901 to allow a local government to close land to hunting; or (2) whether, instead, privately owned land must first be established as a hunting area before hunting is allowed and, if so, what are the current statutory and regulatory procedures for establishing hunting areas.”
Reed v Yackell, 473 Mich 520, 528; 703 NW2d 1 (2005).
Cameron v Auto Club Ins Ass’n, 476 Mich 55, 60; 718 NW2d 784 (2006).
The other hunting limitation identified by the DNR can be found at MCL 324.40111(4), which prohibits hunting or discharging a weapon within 150 yards of an occupied building without first obtaining the written permission of the landowner. A violation of MCL 324.40111(4) is a misdemeanor. MCL 324.40118.
Justice Weaver’s dissenting opinion claims that the plain language of MCL 324.41901 “explicitly authorizes the DNR to determine and define the boundaries of hunting areas in Michigan.” Post at 362-363.
However, MCL 324.41901(1), which is substantively identical to its predecessor statute, MCL 317.332, merely states that “[i]n addition, the department may determine and define the boundaries of the areas.” Read in context, the statute indicates that, in addition to regulating and prohibiting hunting and firearms “where hunting or the discharge of firearms or bow and arrow may or is likely to killthe department may also define the boundaries of the areas. Thus, the sentence at issue in § 41901 indicates that that DNR may “determine and define the boundaries of the areas” where hunting has been restricted, and does not address where hunting is permitted.
In fact, the first phrase in MCL 324.41901(1), stating that the authority to regulate the discharge of weaponry is “[i]n addition to all of the department powers,” (emphasis added) indicates that this authority is coequal, rather than inferior, to the DNR’s authority to regulate the taking of game.
Blank v Dep’t of Corrections, 462 Mich 103; 611 NW2d 530 (2000); York v Detroit (After Remand), 438 Mich 744; 475 NW2d 346 (1991); Coffman v State Bd of Examiners in Optometry, 331 Mich 582; 50 NW2d 322 (1951).
Catalina Marketing Sales Corp v Dep’t of Treasury, 470 Mich 13; 678 NW2d 619 (2004); Ludington Service Corp v Acting Comm’r of Ins, 444 Mich 481; 511 NW2d 661 (1994).
In dissent, Justice Weaver opines that plaintiffs’ property is “established under” part 419 because “Saginaw County, in which plaintiffs’ land is located, is mentioned multiple times” in the Wildlife Conservation Order (WCO). Post at 364. The WCO can he found at <http://www.michigan.gov/documents/Wcao_134367_7.html> (accessed May 2, 2007). However, nothing in the WCO references, much less purports to establish areas under MCL 324.41901 et seq.
See MCL 324.105; MCL 324.41902(3). Of course, if the DNR no longer believes that the administrative rule “adequately coverts] the matter,” then the DNR is encouraged to promulgate new rules in conformance with the Administrative Procedures Act, MCL 24.201 et seq.
It should also be noted that each and every hunting restriction promulgated under part 419 involves only townships, and does not involve a single city or village. See Local Hunting and Firearms Controls, Mich Admin Code, R 317.101.1 through 317.182.12. The last time a local hunting control was implemented was in Brownstown Township in 2004. See Department of Natural Resources, Hunter Safety Section, Local Hunting Area Controls, HC-82-04-001.
The Administrative Procedures Act requires an agency to give notice of proposed rules or rule changes, to hold a public hearing, and to submit the proposed rules or rule changes to the Legislature’s Joint Committee on Administrative Rules for review. MCL 24.241 through 24.246. If the committee objects to a proposed rule, both the Legislature and the Governor must approve legislation repealing or delaying the effective date of the rule. MCL 24.245a. | [
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CORRIGAN, J.
Defendant was charged with and convicted of second-degree murder, MCL 750.317, after he killed the victim with a single gunshot to the head. The trial court denied defendant’s request to instruct the jury on statutory involuntary manslaughter, MCL 750.329. At issue is whether the trial court should have instructed the jury on statutory involuntary manslaughter because it is a necessarily included lesser offense of second-degree murder. We hold that the court correctly denied defendant’s request for the instruction. Statutory involuntary manslaughter is not an “inferior” offense of second-degree murder under MCL 768.32(1) because it contains elements— that the death resulted from the discharge of a firearm and that the defendant intentionally pointed the firearm at the victim — that are not subsumed in the elements of second-degree murder. Thus, statutory involuntary manslaughter is not a necessarily included lesser offense of second-degree murder. We reverse the part of the judgment of the Court of Appeals that held to the contrary and reinstate defendant’s convictions of second-degree murder and possession of a firearm during the commission of a felony, MCL 750.227b. We also deny defendant’s cross-application for leave to appeal because we are not persuaded that the questions presented should be reviewed by this Court.
I. FACTS AND PROCEDURAL POSTURE
Defendant shot and killed a 16-year-old girl who was visiting his home. Defendant and the victim were sit ting on a couch when defendant pointed a loaded gun at the victim’s head and told her, “Say I won’t do it.” A witness in the next room looked away briefly and then heard a gunshot. When the witness looked back, she saw the victim lying motionless on the floor while defendant sat on the couch with the gun in his hand. Defendant told the witness to say that the victim shot herself. The two then fled the house.
Defendant was charged with second-degree murder and felony-firearm. The trial court instructed the jury on the lesser offense of common-law involuntary manslaughter based on gross negligence. The trial court denied defendant’s request to instruct on statutory involuntary manslaughter under MCL 750.329, because it contains elements that are not included in the offense of second-degree murder. The court explained that statutory involuntary manslaughter is therefore a cognate offense, rather than a necessarily included lesser offense, of second-degree murder. The jury found defendant guilty as charged of second-degree murder and felony-firearm.
The Court of Appeals reversed defendant’s convictions and remanded for a new trial on the basis that the trial court erred in failing to instruct the jury on statutory involuntary manslaughter. Unpublished opinion per curiam of the Court of Appeals, issued December 22, 2005 (Docket No. 256066). The Court of Appeals explained that in People v Mendoza, 468 Mich 527; 664 NW2d 685 (2003), this Court held that manslaughter, both voluntary and involuntary, is a necessarily included lesser offense of murder. Thus, under Mendoza, a defendant who is charged with murder is entitled to an instruction on voluntary or involuntary manslaughter if a rational view of the evidence would support it. Although the holding in Mendoza pertained to common- law manslaughter under MCL 750.321, the Court of Appeals here assumed, without explanation, that Mendoza also somehow held that statutory involuntary manslaughter under MCL 750.329 is a necessarily included lesser offense of murder. The Court of Appeals made no attempt to ascertain whether the elements of statutory involuntary manslaughter are subsumed in the offense of second-degree murder. The Court of Appeals also asserted, again without explanation, that Mendoza “appears to contradict” People v Cornell, 466 Mich 335; 646 NW2d 127 (2002). In any event, the Court of Appeals concluded that the trial court had “violated the mandate of Mendoza by rejecting defendant’s requested manslaughter instruction,” and that defendant’s convictions must therefore be reversed.
The prosecution sought leave to appeal on the instructional issue. This Court directed the clerk to schedule oral argument regarding whether to grant the prosecution’s application or take other peremptory action. 474 Mich 1100 (2006). We directed the parties to address
(1) whether statutory involuntary manslaughter, MCL 750.329, is a necessarily included lesser offense of murder; and, if so (2) whether a rational view of the evidence in this case supports a conviction of statutory involuntary manslaughter; and, if so (3) whether the Oakland Circuit Court’s failure to give a jury instruction on statutory involuntary manslaughter was harmless error. [Id.]
n. STANDARD OF REVIEW
Whether statutory involuntary manslaughter is an inferior offense of second-degree murder under MCL 768.32 is a question of law that this Court reviews de novo. Mendoza, supra at 531.
III. ANALYSIS
The trial court did not err in refusing to instruct the jury on statutory involuntary manslaughter under MCL 750.329. MCL 768.32(1) provides:
Except as provided in subsection (2), upon an indictment for an offense, consisting of different degrees, as prescribed in this chapter, the jury, or the judge in a trial without a jury, may find the accused not guilty of the offense in the degree charged in the indictment and may find the accused person guilty of a degree of that offense inferior to that charged in the indictment, or of an attempt to commit that offense.
In Cornell, this Court approved of the following explanation of the word “inferior” in MCL 768.32(1):
“We believe that the word ‘inferior’ in the statute does not refer to inferiority in the penalty associated with the offense, but, rather, to the absence of an element that distinguishes the charged offense from the lesser offense. The controlling factor is whether the lesser offense can be proved by the same facts that are used to establish the charged offense.” [Cornell, supra at 354, quoting People v Torres (On Remand), 222 Mich App 411, 419-420; 564 NW2d 149 (1997).]
This Court then held that an “inferior” offense under MCL 768.32(1) is limited to necessarily included lesser offenses. Cornell, supra at 353-354. In conclusion, we held:
[A] requested instruction on a necessarily included lesser offense is proper if the charged greater offense requires the jury to find a disputed factual element that is not part of the lesser included offense and a rational view of the evidence would support it. [Id. at 357.]
In Mendoza, this Court applied Cornell and concluded that common-law voluntary manslaughter and involuntary manslaughter are necessarily included lesser offenses of murder and thus “inferior” offenses under MCL 768.32(1). Mendoza, supra at 533, 541. We explained that the only element distinguishing murder from common-law manslaughter is malice, and that all the elements of common-law manslaughter are completely subsumed in the offense of murder. Id. at 540-541.
To apply the Cornell/Mendoza test, we must compare the elements of statutory involuntary manslaughter and second-degree murder. The statutory involuntary manslaughter statute at the time defendant killed the victim provided, in relevant part:
Any person who shall wound, maim or injure any other person by the discharge of any firearm, pointed or aimed, intentionally but without malice, at any such person, shall, if death ensue from such wounding, maiming or injury, be deemed guilty of the crime of manslaughter. [MCL 750.329.]
The elements of statutory involuntary manslaughter are as follows: (1) a death, (2) the death was caused by an act of the defendant, (3) the death resulted from the discharge of a firearm, (4) at the time of the discharge, the defendant was intentionally pointing the firearm at the victim, and (5) the defendant did not have lawful justification or excuse for causing the death. People v Heflin, 434 Mich 482, 497; 456 NW2d 10 (1990). By contrast, the elements of second-degree murder are as follows: (1) a death, (2) the death was caused by an act of the defendant, (3) the defendant acted with malice, and (4) the defendant did not have lawful justification or excuse for causing the death. People v Goecke, 457 Mich 442, 464; 579 NW2d 868 (1998).
Comparing the elements of these offenses, we conclude that statutory involuntary manslaughter under MCL 750.329 is not a necessarily included lesser offense of second-degree murder because it is not an “inferior” offense under MCL 768.32(1). It is plain that the elements of statutory involuntary manslaughter are not completely subsumed in the elements of second-degree murder. Statutory involuntary manslaughter contains two elements that are not required to prove second-degree murder: (1) that the death resulted from the discharge of a firearm and (2) that the defendant intentionally pointed a firearm at the victim. Second-degree murder, on the other hand, may be committed without a firearm or even without a weapon of any kind. Because it is possible to commit second-degree murder without first committing statutory involuntary manslaughter, statutory involuntary manslaughter cannot be a necessarily included lesser offense of second-degree murder. Cornell, supra at 361; People v Bearss, 463 Mich 623, 627; 625 NW2d 10 (2001).
Our holding is consistent with People v Holtschlag, 471 Mich 1, 21-22; 684 NW2d 730 (2004), where this Court held:
[I]t must be kept in mind that “the sole element distinguishing manslaughter and murder is malice,” Mendoza at 536, and that “involuntary manslaughter is a catch-all concept including all manslaughter not characterized as voluntary: ‘Every unintentional killing of a human being is involuntary manslaughter if it is neither murder nor voluntary manslaughter nor within the scope of some recognized justification or excuse.’ ” [People v Datema, 448 Mich 585, 594-595; 533 NW2d 272 (1995)]. (Citation omitted.) If a homicide is not voluntary manslaughter or excused or justified, it is, generally, either murder or involuntary manslaughter. If the homicide was committed with malice, it is murder. If it was committed with a lesser mens rea of gross negligence or an intent to injure, and not malice, it is not murder, but only involuntary manslaughter.
Holtschlag applies to common-law manslaughter, not statutory manslaughter. Holtschlag does not, and could not, hold that every killing of a human being is statutory involuntary manslaughter if it was committed without malice, was not voluntary, and was not excused or justified. One who involuntarily kills a person without malice and without excuse or justification does not necessarily commit statutory involuntary manslaughter. Similar to our second-degree murder analysis, statutory involuntary manslaughter contains two elements that are not required to prove common-law involuntary manslaughter: (1) that the death resulted from the discharge of a firearm and (2) that the defendant intentionally pointed a firearm at the victim. Thus, just as statutory involuntary manslaughter is not included in the offense of second-degree murder, it is not included in the offense of common-law involuntary manslaughter. We reject defendant’s and the concurrence’s argument that statutory involuntary manslaughter is merely but one form of common-law involuntary manslaughter.
Further, our conclusion that statutory involuntary manslaughter is not a necessarily included lesser offense of second-degree murder is consistent with pre Cornell caselaw. In Heflin, supra at 497, this Court held that statutory involuntary manslaughter is a cognate lesser offense of murder, not a necessarily included lesser offense. MCL 768.32(1) does not permit consideration of cognate lesser offenses. Cornell, supra at 354.
It does not matter that, in the particular case before us, a firearm was used to commit the murder. As Cornell makes clear, when deciding whether a lesser offense is necessarily included in the greater offense, the determination whether all the elements of the lesser offense are included in the greater offense requires an abstract analysis of the elements of the offenses, not the facts of the particular case. Id. at 360-361. The facts are instead considered to determine whether an instruction on a necessarily included lesser offense is proper in that particular case, i.e., whether the charged greater offense requires the jury to find a disputed factual element that is not part of the lesser offense and whether a rational view of the evidence supports the instruction. Cornell, supra at 357.
Finally, we disagree with the Court of Appeals that Mendoza and Cornell are inconsistent. In Mendoza, we applied the Cornell test and concluded that common-law manslaughter under MCL 750.321, either voluntary or involuntary, is an “inferior” offense of murder. Mendoza, supra at 540-541. We reached this conclusion because common-law manslaughter does not contain any additional elements beyond those required for murder. Id. The only distinction between manslaughter and murder is the element of malice. Id. at 540. For voluntary manslaughter, proof of adequate provocation negates the existence of malice. Id. For involuntary manslaughter, gross negligence is a form of mens rea that is included in the greater mens rea of murder. Id. at 540-541. Thus, we concluded that the elements of common-law manslaughter are completely included in the elements of murder. Id. at 541. A defendant cannot commit murder without first satisfying the elements of common-law manslaughter. The Court of Appeals does not explain how this holding is inconsistent with Cornell, and we do not see any inconsistency.
IV CONCLUSION
Because statutory involuntary manslaughter under MCL 750.329 contains elements that are not included in second-degree murder, it is not an “inferior” offense under MCL 768.32(1), and no instruction was permitted under Cornell. Thus, the trial court did not err in refusing to instruct the jury on statutory involuntary manslaughter. We reverse this aspect of the Court of Appeals judgment and reinstate defendant’s convictions of second-degree murder and felony-firearm. We deny defendant’s cross-application for leave to appeal because we are not persuaded that the questions presented should be reviewed by this Court.
TAYLOR, C.J., and WEAVER and Young, JJ., concurred with Corrigan, J.
Defendant also filed a cross-application for leave to appeal. In the order directing the clerk to schedule oral argument on the prosecution’s application, this Court stated that defendant’s cross-application remains pending. 474 Mich 1100 (2006).
Justice Maekman concedes in his concurrence that statutory involuntary manslaughter requires proof of an element not required to prove second-degree murder. The discussion should end there. Because all the elements of statutory involuntary manslaughter are not completely subsumed in the elements of second-degree murder, statutory involuntary manslaughter cannot be an inferior offense to second-degree murder under MCL 768.32(1) and Cornell, supra at 354. Justice Markman’s discussion of the relationship between statutory and common-law manslaughter is thoughtful hut is irrelevant to our analysis.
“Cognate offenses share several elements, and are of the same class or category as the greater offense, but the cognate lesser offense has some elements not found in the greater offense.” Mendoza, supra at 532 n 4.
In Heflin, supra at 505, this Court held that the trial court did not err in refusing to instruct the jury regarding the offense of statutory involuntary manslaughter despite giving instructions on murder and voluntary manslaughter.
Justice Maekman falls into the trap of comparing facts that could support a second-degree murder conviction with the elements of statutory involuntary manslaughter. | [
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CORRIGAN, J.
This medical malpractice case presents the question whether a successor personal representative of a decedent’s estate is barred from filing a subsequent complaint by the doctrine of res judicata when the initial personal representative filed a complaint that was involuntarily dismissed. The Court of Appeals held that the successor representative’s complaint was not barred by res judicata because a grant of summary disposition on statute of limitations grounds in the first action was not an adjudication on the merits. The Court of Appeals, however, overlooked MCR 2.504(B)(3), which states that, unless the court otherwise specifies in its order for dismissal, an involuntary dismissal, “other than a dismissal for lack of jurisdiction or for failure to join a party under MCR 2.205, operates as an adjudication on the merits.” Under the plain language of MCR 2.504(B)(3), the dismissal of the, initial personal representative’s untimely complaint was an adjudication on the merits. Because all the elements of res judicata have been satisfied, plaintiffs claims are barred. Accordingly, we reverse the Court of Appeals judgment and reinstate the trial court’s order granting summary disposition for the defendants.
I. UNDERLYING FACTS AND PROCEDURAL HISTORY
The decedent, Lisa Griffin, arrived at defendant Sinai Hospital of Greater Detroit complaining of shortness of breath on February 28, 2000. On March 1, 2000, Lisa Griffin died of cardiac arrest, allegedly as a result of defendants’ failure to administer intravenous antibiotics. Decedent’s brother, David Griffin, was appointed personal representative of her estate on March 16, 2000, which meant that the two-year saving provision would expire March 16, 2002. David Griffin served defendants with a notice of intent to file suit on February 7, 2002, which tolled the period of limitations until August 9, 2002, with 21 days remaining. David Griffin, however, did not initiate a wrongful death, medical malpractice action against defendants until September 25, 2002. In that action, the trial court granted summary disposition to defendants under MCR 2.116(C)(7), ruling that Griffin filed his complaint after the period of limitations had expired and more than two years after the letters of authority were issued. Griffin did not appeal the trial court’s decision.
Almost a year later, on August 26, 2003, plaintiff Eula Washington, decedent’s mother, was appointed successor personal representative of decedent’s estate. Relying on the wrongful death saving provision, MCL 600.5852, and this Court’s decision in Eggleston v Bio-Medical Applications of Detroit, Inc, 468 Mich 29; 658 NW2d 139 (2003), plaintiff initiated the instant wrongful death action against defendants, which was identical to the first action. Defendants moved for summary disposition on the ground that plaintiffs suit was barred by res judicata. The trial court granted defendants’ motion, concluding that Eggleston, supra, did not preclude the application of res judicata.
The Court of Appeals reversed in an unpublished opinion. The Court stated that the wrongful death saving provision permitted a successor personal representative to bring a wrongful death action within two years of the issuance of letters of authority and within three years after the period of limitations has run. The Court further held that, under Eggleston, supra, the two-year saving period for the successor personal representative does not commence upon the issuance of letters of authority to the initial personal representative. Finally, although summary disposition usually operates to resolve a matter on the merits, the Court held that res judicata did not govern the case because a dismissal on the basis of the expiration of the period of limitations does not constitute an adjudication on the merits. The Court of Appeals cited several cases in support of this latter proposition.
Defendants sought leave to appeal in this Court. We granted defendants’ application, ordering the parties to brief the following questions: (1) whether a successor personal representative is entitled to his own two-year saving period in which to file a complaint under MCL 600.5852 if the first personal representative served a full two-year term, and (2) whether a subsequent complaint filed by a successor personal representative is barred by res judicata and MCR 2.116(C)(7) or MCR 2.504(B)(3) if the first personal representative filed a complaint. We hold that, because the trial court’s involuntary dismissal of the initial personal representative’s wrongful death suit operates as an adjudication on the merits under MCR 2.504(B)(3), plaintiffs claims were properly dismissed on the basis of res judicata. In light of this holding, it is unnecessary to decide whether a successor personal representative is entitled to his own two-year saving period after the first personal representative served a full two-year term but failed to file a claim within that time.
II. STANDARD OF REVIEW
We review de novo a trial court’s decision with regard to a motion for summary disposition under MCR 2.116(C)(7). Bryant v Oakpointe Villa Nursing Ctr, Inc, 471 Mich 411, 419; 684 NW2d 864 (2004). We also review de novo questions of statutory interpretation. Ayar v Foodland Distributors, 472 Mich 713, 715; 698 NW2d 875 (2005). Additionally, the application of a legal doctrine, such as res judicata, presents a question of law that we review de novo. Pierson Sand & Gravel, Inc v Keeler Brass Co, 460 Mich 372, 379; 596 NW2d 153 (1999).
III. LEGAL ANALYSIS
First, we emphasize that we do not here decide the threshold question whether a successor personal representative is entitled to her own two-year period to file suit if the original personal representative has served a full two-year period. We decline to address this question because res judicata nonetheless bars plaintiff from commencing this action. This Court has held:
The doctrine of res judicata is employed to prevent multiple suits litigating the same cause of action. The doctrine bars a second, subsequent action when (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first. Sewell v Clean Cut Mgt, Inc, 463 Mich 569, 575; 621 NW2d 222 (2001). This Court has taken a broad approach to the doctrine of res judicata, holding that it bars not only claims already litigated, but also every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not. Dart v Dart, 460 Mich 573, 586; 597 NW2d 82 (1999). [Adair v Michigan, 470 Mich 105, 121; 680 NW2d 386 (2004).]
Therefore, we must consider these three elements of res judicata in turn.
In the present case, the Court of Appeals held that the prior action had not been decided on the merits because “a grant of summary disposition on grounds that the statute of limitation has expired does not constitute an adjudication on the merits of a cause of action.” Washington v Sinai Hosp of Greater Detroit, unpublished opinion per curiam of the Court of Appeals, issued December 1, 2005 (Docket No. 253777), slip op at 2, citing Rogers v Colonial Fed S&L Ass’n, 405 Mich 607, 619 n 5; 275 NW2d 499 (1979), Nordman v Earle Equip Co, 352 Mich 342 346; 89 NW2d 594 (1958), and Ozark v Kais, 184 Mich App 302, 308; 457 NW2d 145 (1990). The reliance by the Court of Appeals on Rogers, however, is misplaced. This Court recently overruled Rogers in Al-Shimmari v Detroit Medical Ctr, 477 Mich 280; 731 NW2d 29 (2007), holding that Rogers not only has been superseded by the current court rules, but also that it was incorrectly decided under the then-existing GCR 1963, 504.2, which was substantially similar to the current MCR 2.504(B)(3).
The current version of MCR 2.504(B) provides, in pertinent part:
(1) If the plaintiff fails to comply with these rules or a court order, a defendant may move for dismissal of an action or a claim against that defendant.
(3) Unless the court otherwise specifies in its order for dismissal, a dismissal under this subrule or a dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for failure to join a party under MCR 2.205, operates as an adjudication on the merits.
In the first action, defendants were granted summary disposition under MCR 2.116(C)(7), because the initial personal representative failed to file suit within the period of limitations. Plaintiff argues that, under MCR 2.504(B)(3), the only “merits” decided in the first action are whether the initial personal representative timely filed his action. MCR 2.504(B)(3), however, does not distinguish between the grounds for a dismissal. Rather, subrule B(3) plainly states that “a dismissal under this subrule or a dismissal not provided for in this rule . .. operates as an adjudication on the merits.” In the absence of any language in an order of dismissal limiting the scope of the merits decided, the court rule plainly provides that the order operates as an adjudication of the entire merits of a plaintiffs claim. The trial court’s dismissal of the case was, therefore, an involuntary dismissal under MCR 2.504(B)(1). Moreover, the trial court did not specify that its order was without prejudice. Also, the trial court’s order in the first action was not “a dismissal for lack of jurisdiction or for failure to join a party under MCR 2.205.” Consequently, the decision in the first action was an adjudication on the merits of the initial personal representative’s claims, not just on the issue whether he timely filed his claims.
The third requirement for the application of res judicata is that “the matter in the second case was, or could have been, resolved in the first.” Adair, supra at 121. Plaintiff argues that the issue whether a successor personal representative has her own two-year saving period could not have been resolved in the first case because the successor personal representative had not been appointed at that time. As stated in Adair, however, this Court uses a transactional test to determine if the matter could have been resolved in the first case. Id. at 123. As this Court explained in Adair-.
“The ‘transactional’ test provides that ‘the assertion of different kinds or theories of relief still constitutes a single cause of action if a single group of operative facts give rise to the assertion of relief.’ ” [Id. at 124 (citations omitted in original).]
“ ‘Whether a factual grouping constitutes a “transaction” for purposes of res judicata is to be determined pragmatically, by considering whether the facts are related in time, space, origin or motivation ....’” Id. at 125 (citation omitted). See also Reid v Thetford Twp, 377 F Supp 2d 621, 627 (ED Mich, 2005); Banks v LAB Lansing Body Assembly, 271 Mich App 227, 230 (2006). Because plaintiffs complaint is identical to that which was filed in the first action, the identical operative facts now support her medical malpractice claim. Therefore, the third res judicata requirement is met because the matter asserted in the second suit was raised in the first.
The application of the wrongful death saving provision, MCL 600.5852, does not affect this analysis. Although § 5852 allows a personal representative to bring an action in her own name, the legal right she represents belongs to the estate, and her claim must be brought on behalf of the estate. Plaintiff does not have her own legal right to bring a wrongful death claim against defendant. Hence, the only factual condition that cannot be mirrored in the original suit is the name representing the estate on the complaint. The name on the complaint in the second action, however, is not an “operative fact” because it represents the same interest as that represented in the first action. Rather, the “operative facts” here are those underlying the estate’s claim for medical malpractice. Accordingly, plaintiffs claim is not fundamentally different from her predecessor’s claim, which relied on the same operative facts.
Finally, with regard to the second res judicata requirement, plaintiff is in privity with the initial personal representative. We held in Adair that “[t]o be in privity is to be so identified in interest with another party that the first litigant represents the same legal right that the later litigant is trying to assert.” Adair, supra at 122.
Plaintiff cites Phinisee v Rogers, 229 Mich App 547; 582 NW2d 852 (1998), for the proposition that the familial relationship between a mother and child does not put them in privity with one another. In Phinisee, the Court of Appeals concluded that the doctrine of res judicata did not bar the plaintiff child’s paternity action against the defendant, despite the earlier dismissal of the plaintiffs mother’s paternity action against the same defendant. Id. at 554. Plaintiffs reliance on Phinisee, however, is misplaced. In concluding that the mother and child in Phinisee were not in privity, the Court relied on its own conclusion that “ ‘[a]t some point, the law must recognize the fact that a child’s interests in paternity litigation are much greater than the mother’s interest in continued support.’ ” Id. at 552, quoting Spada v Pauley, 149 Mich App 196, 205 n 6; 385 NW2d 746 (1986). The Court declined to apply res judicata to the plaintiffs claims because she did not represent the same legal interest as her mother in the first action, and thus, was not in privity with her.
In this case, both plaintiff and the initial personal representative were representing the same legal entity —namely, the estate — and prosecuting the estate’s cause of action against defendants for malpractice. The familial relationship between plaintiff and the initial personal representative is, therefore, irrelevant. Because plaintiff represents the same legal right that was represented by the initial personal representative, she is in privity with the initial personal representative.
Thus, all three requirements for the application of res judicata have been met in this case. Moreover, while we expressly do not decide whether a successor personal representative is entitled to her own two-year saving period where the original personal representative served a full two-year period, we note that nothing in MCL 600.5852 precludes the application of res judicata in this case, even if we were to interpret this provision in plaintiffs favor. Accordingly, we reverse the judgment of the Court of Appeals and reinstate the trial court’s order granting summary disposition in favor of defendants.
Taylor, C.J., and Weaver, Young, and Markman, JJ., concurred with CORRIGAN, J.
CAVANAGH and KELLY, JJ. We concur in the result only.
MCL 600.5852.
MCL 600.5856(c).
Washington v Sinai Hosp of Greater Detroit, unpublished opinion per curiam of the Court of Appeals, issued December 1, 2005 (Docket No. 253777).
Rogers v Colonial Fed S&L Ass’n, 405 Mich 607; 275 NW2d 499 (1979); Nordman v Earle Equip Co, 352 Mich 342; 89 NW2d 594 (1958); Ozark v Kais, 184 Mich App 302; 457 NW2d 145 (1990).
475 Mich 909 (2006).
While we make no pronouncement on the correctness of this statement, we note that Phinisee is further distinguishable from the present case because in Phinisee no final order was entered in the first action. Phinisee, supra at 550-551.
See MCL 600.2922; Shenkman v Bragman, 261 Mich App 412, 415-416; 682 NW2d 516 (2004). | [
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Butzel, C. J.
Plaintiff Sperry & Hutchinson Company deals in trading stamps given by retail merchants to cash customers. The stamps are redeemable in cash or merchandise. Plaintiff Broek-Ederle Company is engaged in the retail sale of gasoline and gives these stamps to its customers. Upon being threatened with prosecution for violation of Act No. 282, § 6, Pub. Acts 1937 (Comp. Laws Supp. 1937, § 9829-16, Stat. Ann. 1938 Cum. Supp. § 28.78 [6]), plaintiffs brought suit to enjoin defendant prosecutor from bringing such threatened action and claimed that section 6, was unconstitutional. The trial judge so held and defendant appeals.
We refer to our decision in People v. Victor, ante, 506. The trial judge was correct and his decree enjoining prosecution is affirmed, but without costs, a public question being involved.
Wiest, Sharpe, Chandler, and North, JJ., concurred with Butzel, C. J. | [
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Wiest, C. J.
This is an action to recover damages for fraud and deceit, alleged to have been perpetrated by defendants, acting in concert, by means of which plaintiff was induced to accept, in satisfaction of any and all claims due, or to become due him by virtue of his services, hereinafter mentioned, contracts or undertakings connected with his efforts, whether for cash, expenses, commissions, salary or otherwise, and in full consideration of the termination of any and all existing contracts or agreements with reference to the foregoing, the sum of $7,500.
The Wolverine Bnmper & Specialty Company of Grand Rapids, at one time a very successful manufacturing company, was in financial difficulties in the fall of 1933. The business of the company had decreased and numerous creditors were after their pay. Among other creditors the company owed Albert P. Crell upward of $80,000. Mr. Crell was business manager of the company. At that stage of the corporate affairs plaintiff was offered and accepted an option, under which he might perfect a reorganization of the company or the formation of a new one, and he claims he had accomplished such purpose on November 23, 1934, in the organization of the Michigan Bumper Corporation, when defendants, by concert of action, made false and fraudulent representations which induced him to surrender his rights under the option and forego great pecuniary gain, for the sum of $7,500. He claims he later learned the truth about the matter and then, without returning the money, he brought this suit to recover damages and, upon trial by jury, had verdict and judgment thereon for $42,343.75.
Defendants’ motion for judgment in their favor or for a new trial was denied as was also plaintiff’s motion for an increase of the damages.
Defendants as well as plaintiff appeal.
We shall not undertake to state the various ramifications of the case as it would be long and of no benefit to the profession and merely fill our reports with unnecessary recitals.
Counsel for defendants take 22 printed pages in stating the facts, and counsel for plaintiff takes 18 pages in supplementing that of defendants.
The declaration charged fraud and deceit as follows :
“That on November 23,1934, said defendant John Crell requested plaintiff to come to the office of Mr. Crell’s attorney. This plaintiff went to said office and the said defendants were all then and there present, and it was then and there stated and represented to this plaintiff by the said John Crell in the presence of and with the full knowledge and acquiescence .of the other defendants, that the said Albert P. Crell and John Crell had learned various facts which made it clear that- it was impossible to go ahead with the proposed organization of the proposed Michigan Bumper Corporation; that the proceedings which had taken place in the said circuit court and the proceedings which had been taken in bankruptcy, and the attitude of the creditors, and the various other facts claimed to be known by said defendants, had created such obstacles that the matter would all have to be dropped, and stated and represented that defendant Takens and defendant Wagenaar and the Securities Exchange Corporation were entirely and finally withdrawing from the whole enterprise and that Albert P. Crell was guaranteeing them against losses not to exceed $10,000; that the subscriptions to stock which had been taken would all be sent back to the subscribers and can-celled; that the said Albert P. Crell was still determined that the creditors of the Wolverine Bumper & Specialty Company should be paid 100 cents on the dollar; that he had already arranged at Detroit to borrow personally the necessary money to pay off said creditors and take over the business, and that the said Albert P. Crell and John Crell were leaving for Detroit early the following morning for that purpose; and that because of the action already taken by said defendants, the plaintiff was left without any legal rights or relief whatever, but they were willing to pay him a nominal amount for the very difficult and valuable service which he had performed, and proposed that the said Albert P. Crell would agree to pay him $7,500 to terminate his contract with the said Albert P. Crell, and to further induce and persuade this plaintiff to agree to such proposal, said Albert P. Crell and John Crell then and there instructed their attorney to prepare an agreement between defendant Takens, defendant Wagenaar, Securities Exchange Corporation, Albert P. Crell and Wolverine Bumper & Specialty Company, wholly and finally terminating all agreements and contracts regarding said enterprise and said attorney then and there dictated and prepared such an agreement in writing, and the said defendants represented and pretended that said agreement was genuine and bona fide, and that all contracts and business relations between them were thereby terminated, and that said enterprise for organizing said Michigan Bumper Corporation had been abandoned, and said defendants, and each of them, then and there wholly failed and omitted to make known or disclose to the plaintiff any other facts or circumstances.”
Defendants denied the alleged fraud and deceit and claimed the settlement was a business transaction, every feature of which was fully understood by plaintiff and contend that, without rescission and return or tender of the consideration received, plaintiff cannot recover damages in this action at law.
Plaintiff, by this action, has elected to treat the settlement as subsisting and in effect affirms it, but that does not bar this action to recover damages to the extent of clearing the transaction of established fraud and deceit.
Defendants allege error in the following instruction to the jury upon the measure of damages:
“If the plaintiff is entitled to recover, it will be for such sum as will fairly represent the value of the property rights that he surrendered on November 23d, less the $7,500 that he may have received.
“If lie had so far completed his contract with Takens and Wagenaar that he was entitled to 37,500 shares of stock to be held in escrow, then you would have to determine what was the fair market value of this on November 23d.
“In determining the fair market value, as you do, you take into consideration the fact that previous to this similar shares were being sold, or subscriptions, similar shares were being taken at one dollar per share. These shares were not to be delivered until such time as the Michigan securities commission should authorize their delivery. Neither the plaintiff nor the defendants on November 23d knew when that delivery might be made.
“What was Mr. Hutchings’ interest; what were his property rights in those shares, if he had any, on November 23d? What were they worth? Were they worth less than one dollar or were they worth more than one dollar per share? That is what you will have to determine.
“Also he claims that on this same day he was entitled, under his contract, to 37,500 option warrants, and that each one of those option warrants would give him or the holder the right to purchase one share of stock of this corporation by paying the sum of one dollar. What were those option warrants worth on that day, that would be delivered to him sometime in the future? If the stocks were being sold at that time or in the future for one dollar per share, and that it was necessary to take one dollar with each option warrant and place with that option warrant in order to buy a share of stock, what was each option warrant worth? Was it worth anything?”
Defendants contend that such instruction permitted damages as upon rescission and did not give the measure of damages for fraud and deceit.
Defendants requested the court to instruct the jury as follows:
“I charge you, members of the jury, that if you first find by a preponderance of the evidence that the settlement contracts of November 23 and Novem her 24,1934, were induced by the materially fraudulent misrepresentations of any one of the defendants and that the defendants were acting in concert, and that if you further find by a preponderance of the evidence that the' plaintiff parted with valid and enforceable and therefore valuable rights when he signed the settlement agreements, then before you can render any verdict for the plaintiff, you must further find by a preponderance of the evidence that the value of the rights which plaintiff parted with by signing the settlement agreements was in excess of $7,500, and if this be so, then your verdict can only be for whatever value you find those rights to have been worth on November 23, 1934, less the $7,500 which the plaintiff received for signing the settlement agreements. In other words, if you find that the value on November 23, 1934, of the rights which plaintiff parted with by signing the settlement agreements was $7,500 or less, then your verdict must be for the defendants of no cause of action; but if you find that the value of those rights on November 23, 1934, was in excess of $7,500, then your verdict for the plaintiff must be only in the amount of such excess.”
There was more to the request, in the nature of argument, but we have stated enough to show that the court followed the idea of the measure of damages put forward by defendants, and they are now in no position to say the court should have informed the jury that plaintiff’s damages were limited to the fraud and not upon deprivation of accrued contract rights.
Defendants claim the damages awarded are grossly excessive and unreasonable.
The award for damages, found by the jury, was within the evidence under the above mentioned instruction and request, and we find no good reason for disturbing the same.
The finding of fraud, in that plaintiff had accomplished, in effect, a reorganization of the company when defendants, whose interests stood to pay him, desired to get rid of the contract rights and obligations and to avail themselves of the result of his labors in accomplishment of such purpose, made fraudulent representations, deceitful in intent and calculated to induce plaintiff to forego his earned compensation for a pittance thereof, finds support in the evidence, and cannot be found so clearly against the weight thereof as to call for reversal.
Error is claimed in several rulings of the court on the admission, rejection and striking out of testimony.
Plaintiff claimed accomplishment of reorganization of the company under the name of the Michigan Bumper Corporation on November 23, 1934, that being the date of the settlement agreement.
The court struck out the testimony of John Or ell to the effect that the Michigan Bumper Corporation had been a dummy corporation up until March 1, 1935, and excluded testimony of another witness as to oral communications with the Michigan securities commission relative to the application of the Michigan Bumper Corporation for acceptance of its stock for filing by the Michigan securities commission, the purpose being to show that such oral statements caused delay in operation of the approval by the commission on November 16, 1934, of sale of Michigan Bumper Corporation stock to the public.
The mentioned rulings and others have been examined and found not to be of sufficient moment to constitute reversible error.
Counsel for defendants requested the court to instruct the jury in accord with 16 requests. These requests, in connection with the instructions given, have been examined, many of them found to be argumentative in nature and some others only in amplification of instructions given and we think the instructions given the jury by the court sufficiently covered the issues to be submitted to the jury.
Refusal of the trial judge to grant plaintiff’s motion to increase the damages is affirmed.
We find no reversible error. The judgment is affirmed, with costs to plaintiff.
Butzel, Bushnell, Sharpe, Potter, Chandler, and North, JJ., concurred. McAllister, J., did not sit. | [
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Bushnell, J.
On Janaary 21, 1925, plaintiffs, as vendees, entered into a written contract in which they agreed to pay $1,300 for certain real estate described as follows:
“Lot nambered 432, Dasher Estates Sabdivision, according to the plat recorded in liber 52 of plats, at page 13, Wayne coanty records.”
Defendant Fort Enreka Land Company was the original vendor in this contract. The remaining defendants acqaired legal title to the property snbseqnent to the date of the contract, the Carrier Lumber Company being the owner of record when plaintiffs’ bill of complaint was filed. Plaintiffs made payments on their land contract until 1932. In April of 1936 plaintiffs received a notice of forfeiture, signed by Harry W. Brower as attorney for defendants Dasher, in which it was claimed that there was due $155.93 on the contract. After a conversation with Mrs. Robinson, an agent of defendant Midwest Realty, regarding payment,, the balance due was agreed upon as $153.91, and plaintiffs paid the sum of $53.91 and agreed to pay the remaining $100 in monthly instalments. On June 16, 1936, the $100 was paid by check; plaintiffs requested a deed and abstract and were informed by Mrs. Robinson that the Midwest Realty was very busy and it would be a month or six weeks before the papers could be delivered. However, that same night Mrs. Robinson called again on the Hornbecks and told them that their check for $100 could not be accepted. A discussion followed in which Mrs. Robinson told Mrs. Hornbeck that the Midwest was going to build some houses in the subdivision and “we wondered if * * * Mr. Robinson would kind of like your lot.” The Hornbecks were urged to visit the property and see if they would exchange their lot for another in the same subdivision. The Horn-becks agreed to consider the matter and, a little later, did examine the property but were not satisfied with the lot that was offered in exchange. In August the Hornbecks, after again requesting delivery of their deed and abstract, were urged to come out and see if they could not agree upon another lot. The Hornbecks again visited the property on August 9,1936, and discovered, for the first time, that a house was being built upon their lot. Mrs. Robinson called again on the Hornbecks, who declined to make any exchange. A conference was had the day following, between Brower and Hornbeeks, bnt without result and, on the 19th, the vendees were served with a notice of default. The $100 check, however, had been deposited by Midwest Realty, Inc., and was paid on June 22, 1936. On August 25, 1936, plaintiffs filed a bill of complaint seeking specific performance of the land contract and, in lien thereof, a decree entitling them to a rescission and the reimbursement of moneys paid on the contract, plus interest and taxes. The matter was referred to a circuit court commissioner, who took testimony, from which it appears that Harry Brower, agent of the Dashers and the president of Midwest Realty, Inc., apparently relied upon his assumption that the Hornbeeks would take another lot and arranged with the Currier Lumber Company to furnish building materials and gave it a deed to the premises. This deed was recorded both as a deed and a mortgage.
The circuit court commissioner found that, from the date of the land contract to June 16, 1936, the Hornbeeks had paid principal, interest and taxes totaling $1,713.33, and that the Currier Lumber Company had furnished building materials in the value of $1,700.29. The decree entered in the circuit court states that the amount due plaintiffs is $2,-459.33, and gives the Currier Lumber Company a mortgage lien in the sum of $1,792.50. During the pendency of the cause the parties agreed that an order might be entered appointing a receiver over the property with authority to complete the house at a cost not to exceed $1,500, and with power to sell the premises at not less than $5,700. This agreement was embodied in the decree, which provided that the receiver should have power to rent, mortgage and sell the property, but that no sale should be made for less than $5,700, except upon petition to the court, and that the proceeds of the sale should be disbursed in the following order: To the receiver for his services, $100, and, in addition, such necessary expenses as might be allowed; to the receiver the amount disbursed by him in completing the building and the costs of mortgage and sale; to Currier Lumber Company, $1,792.50, with interest and costs, less any moneys realized by it from the certain other transactions therein detailed; to plaintiffs, $2,459.33, with interest and costs; and then to Midwest Realty, Inc., any balance that might be remaining.
Defendants contend that the court should have held plaintiffs to their agreement to take some other lot in exchange for lot 432.
Appellants argued that, although an oral agreement of this nature would ordinarily be void, there was such sufficient partial performance of the agreement to require the application of 3 Comp. Laws 1929, §13415 (Stat. Ann. §26.910), which reads:
“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. ’ ’
Unless we can find that an oral agreement was completed, there is no need to consider the question of part performance. The testimony presented in the record does not justify the finding that the parties had completed an oral agreement to exchange real estate. Taken as a whole, the facts indicate that the transaction between the parties was not completed and, at most, their dealings were in the state of negotiation. No one claims that the alleged oral agreement was definite. We are unable to find enough testimony to show mutual promises. One asserting an oral contract in relation to land has the burden of proving it by clear and convincing evidence. Bame v. Bame, 250 Mich. 515.
Plaintiffs did not know that anyone had taken possession of their property until August 9, 1936, when they visited the premises and saw a house being* erected upon their lot. They had never consented to the use of their land nor could anything in their previous conversations with Brower or his agent, Mrs. Robinson, be construed as an authorization of or acquiescence in such use. On the contrary, Mrs. Hornbeck called on Brower the following* day and secured legal advice two days later and plaintiffs’ bill of complaint was filed August 25th. The facts strongly contradict any claim of consent, approval or laches.
It is argued that “where one by mistake built a house on the lot of another, the owner can recover no more than the value.of his lot.” Appellants maintain that this view is supported by Rzeppa v. Seymour, 230 Mich. 439, and Hardy v. Burroughs, 251 Mich. 578. Both of these cases dealt with a situation arising out of a bona fide mistake, and equitable relief was granted. The facts in this appeal cannot support a finding that there was a bona fide mistake on the part of Brower, Midwest Construction or Midwest Realty. Brower testified on direct examination that he assumed that plaintiffs would take another lot. He said:
“It was my understanding they were going to take another lot and I had been informed by everybody that came in contact with her that she would take another lot and I naturally became worried be cause we liad spent quite a little money. The first thing after her visit I wrote her a letter and asked her if she wouldn’t pick out another lot. "When I received no reply to this letter we sent out a notice of intention that declared the contract void, which was followed by a forfeiture notice which was introduced into evidence in this case. We gave one I think in the forepart of April, April 10th, in which we told them that the balance on this lot was $155.95 and if they paid this on, or before April 25, 1936, we would accept that as full settlement.”
Eelying on this understanding and, in the absence of a definite written agreement to that effect, Midwest conveyed to Currier, thereby making delivery of a deed to plaintiffs impossible if and when their obligation under the contract had been fully performed. Midwest did more. Having failed to secure plaintiffs ’ agreement to exchange lots, they sent a notice of forfeiture of the land contract and thereafter accepted and retained the entire amount which was agreed upon as the balance due on the land contract. Midwest’s conveyance to the Currier Lumber Company amounted to a rescission on the part of the vendors. Himebaugh v. Chalker, 261 Mich. 80. In Re Reason’s Estate, 276 Mich. 376, the court said:
“One who has contracted to sell a piece of property, whether real or personal, to another and who sells or transfers the same property to a third person while the contract still remains in force and executory, violates the contract by disabling himself from performing it and thereby gives to the other party the right to rescind it or treat it as abandoned and to recover whatever he may have given in consideration of it. 1 Black on Eescission and Cancellation, §§ 210, 211; 2 Black on Eescission and Cancellation, § 432.
“This was the rule recognized in Atkinson v. Scott, 36 Mich. 18, and cases cited therein, as well as in Weaver v. Aitcheson, 65 Mich. 285, and Himebaugh v. Chalker, 261 Mich. 80.”
Appellants cite Hafner v. A. J. Stuart Land Co., 246 Mich. 465, in support of their argument that the court erred in decreeing individual liability on defendants when there was no showing of the amounts received by each of them on the land contract. The original vendor, Fort Eureka Land Company, assigned the contract to Lieber & Norton, Inc., a corporation, which later changed its name to Edward J. Lieber, Inc., and it in turn assigned to defendants Dasher, who assigned to Midwest Realty, Inc., who deeded to Midwest Construction, Inc. The various defendants were held jointly and severally liable for the payment of the money due plaintiffs. The record in this appeal does not contain any testimony as to the respective dates of transfer of title, beginning with Fort Eureka Land Company and ending with Midwest Construction, Inc. Although defendants might have been entitled to a determination of this phase of the case had the question been raised at the time of trial, we do not pass upon questions that were not raised in the trial court. The decree provides for the appointment of a liquidating receiver and sale of the premises. Furthermore, the trial court expressly reserved jurisdiction over matters of accounting, management, liquidation and disbursements of moneys and retained the right to make orders relating thereto.
The decree is affirmed, with costs to appellees.
Wiest, C. J., and Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred. Butzel, J., did not sit. | [
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Chandler, J.
Plaintiff and defendant were, respectively, the vendor and vendee -under a certain land contract dated February 14, 1925. The purchase price of the land sold was fixed at $33,000, the contract providing for an initial payment of $8,000 with the balance payable in instalments of $1,500 or more annually thereafter. Default occurred in the terms and conditions of said contract, and on February 12, 1936, the bill of complaint herein was filed, praying for foreclosure and a decree for the deficiency in the event the proceeds from the sale of the premises failed to equal the amount found by the court to be remaining unpaid. Defendant’s answer, among other things, prayed that the court establish a minimum or “upset” price at which the premises might be sold in accordance with the provisions of 3 Comp.- Laws 1929, § 14366, as amended by Act No. 229, Pub. Acts 1933 (Comp. Laws Supp. 1935, § 14366, Stat. Ann. § 27.1134).
Upon hearing held October 5, 1937, the following colloquy occurred:
“Mr. Donaldson: In connection with this foreclosure, it was our purpose at the time of the trial to ask the court to fix an upset price in connection with the sale of the property. We would like at this time to reserve that right until the confirmation of that sale. We don’t anticipate what that sale will be or what price it would bring. Consequently, we would ask the court to reserve us the right to come in on a petition to object to the confirmation and then enter proofs, put in our testimony. * * *
“Mr. Donaldson: Now if your Honor please, in respect to the phase of this trial which fixes the upset price and the chancery sale. That may be reserved until confirmation?
“The Court: Well, under the circumstances I hesitate about extending the time for that.
“Mr. Donaldson: Properly it comes up at the time of that confirmation. That is our practice in Detroit certainly. The upset price is fixed on objections to the confirmation.
“The Court: Well, out here we usually do it — fix it before sale — fix the upset price before sale.
“Mr. Donaldson: In this circuit?
“The Court: Yes.
“Mr. Donaldson: Well, I am not prepared to offer testimony on that matter. They have one witness here who is an appraiser, I understand, and are prepared to do that but I am not prepared this morning.”
A decree of foreclosure was entered and the premises ordered sold, the court finding the balance remaining unpaid on the contract to be $28,225.57.
Thereafter, on October 14, 1937, defendant filed a separate petition praying that the court establish a minimum or “upset” price for the sale of said property, and testimony was subsequently taken as to the value thereof.
On February 21, 1938, the commissioner’s report of sale was filed, showing that on January 31, 1938, the premises were sold to plaintiff, the highest bidder, for the sum of $8,307. Defendant filed objections to the report of sale on the grounds that plaintiff’s bid was wholly inadequate and that there was pending the motion for the court to establish a minimum sale price, and that confirmation of the sale would be improper prior to disposition of said motion. Upon hearing of this motion, the court suggested that plaintiff’s bid be increased to $12,000. This being agreeable to plaintiff, the minimum price was fixed by the court at this amount, the report of sale amended to conform therewith, and the sale confirmed. In connection therewith, the following occurred:
“Mr. McClatchey: In this case, your Honor, when I was here two weeks ago you suggested we raise the bid from $8,250 to $12,000 and draw an order accordingly and I have prepared the order changed.
“The Court: Making the npset price $12,000?
“Mr. McClatchey: Instead of $8,250.
“The Court: Is that satisfactory?
“Mr. Donaldson: If the court please, that isn’t in line with the testimony that was had before your Honor.
“ The Court: I am quite well satisfied that $12,000 is the proper price. I have given it quite a lot of thought and consideration. You may have the order as presented.
“Mr. Donaldson: May we have 20 days’ stay?
“The Court: Yes.”
It is from the order so entered that defendant appeals, contending that the same amounted to a resale of the premises and is invalid because there was no compliance with the statutory provisions governing the manner in which such sales shall be had.
It is conceded that 3 Comp. Laws 1929, § 14686 (Stat. Ann. § 27.1650), is controlling as to the matter of notice of sale and the manner in which it shall be held. This section provides that the sale shall be held in accordance with the statutory requirements governing sales of real estate on execution, the same being found in 3 Comp. Laws 1929, § 14620 et seq. (Stat. Ann. § 27.1584 et seq.).
Although it is apparent that 3 Comp. Laws 1929, § 14366, as amended by Act No. 229, Pub. Acts 1933 (Comp. Laws Supp. 1935, § 14366, Stat. Ann. § 27.1134) contemplates that the minimum or “upset” price shall be fixed by the court prior to the date of sale, in view of the fact that such price was determined at the time of confirmation, upon request of defendant’s counsel, his complaint that the procedure was improper is unimpressiye.
From the colloquies, hereinbefore quoted, it is unmistakably clear that the court was prepared to fix the minimum price at the time the hearing was had on the bill of complaint. At defendant’s express request, decision of this issue was postponed until confirmation, testimony as to the value of the property having been taken in the interim. It would be wholly inequitable now to set aside the sale because defendant feels that the procedure requested by him was not in accord with statutory provisions relative to notice of sale.
Defendant has neither alleged nor shown that any of the proceedings in connection with the sale were tainted with fraud. He made no effort to show that, had the court refused to confirm the report of sale and ordered a resale, a better price would have been obtained, or that there would have been any bidders other than plaintiff. Plaintiff’s bid made at the commissioner’s sale was based upon the testimony of her expert witness as to the value of the premises. Although objected to as inadequate, the trial court could have, as a matter of law and in the exercise of reasonable judgment, accepted this sum as the minimum or “upset” price. Viewed in this light, the increase of the sale price to $12,000, with plaintiff’s consent, amounted to a gratuity to defendant.
We have examined Bovay v. Townsend (C. C. A.), 78 Fed. (2d) 343 (105 A. L. R. 359), cited by defendant, but do not deem it controlling of the instant case.
The order of the trial court is affirmed, with costs to plaintiff.
Btjtzel, C. J., and Wiest, Btjshnell, Sharpe, Potter and McAllister, JJ., concurred. North, J., took no part in this decision.' | [
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North, J.
After tendering repayment of premiums, plaintiff filed its bill in equity seeking the cancellation of a life insurance policy covering the life of Lawrence H. Jones, now deceased. Eleanor Jones, administratrix of estate of the insured, was made defendant. On the application of Jones dated December 6, 1935, the policy was executed December 17, 1935. In substance, the application stated that Jones did not have a regular medical advisor, that he had not been under observation or treatment in any hospital except for a tonsillectomy, that he had been last medically examined in 1933, that he had never suffered from, consulted a physician about, or had any disturbance or symptoms pertaining to the circulatory system as, for example, heart disease or weakness, shortness of breath, palpitation of the heart, pain about the heart, varicose veins, high blood pressure, et cetera. Plaintiff asserts, that the questions were answered falsely and with fraudulent intent to deceive; and that relying’ on the truthfulness of the answers the policy in question was issued. Defendant contends that there was no fraud and further, that the plaintiff did not rely upon the answers in the application because it had complete knowledge of the insured’s condition and therefore is estopped from setting up the falsity of the answers. Defendant, by cross-bill, seeks payment of the policy. From a decree granting cancellation defendant has appealed.
The testimony shows that, several times between August 14,1931, and September 25,1936, Jones consulted a Doctor Maloney. On October 31, 1931, the patient complained of pain over the right arm and chest which led the doctor to suspect angina pectoris and since Dr. Maloney was not a heart man, he referred Jones to a competent cardiologist, Dr. Colvin, who took an electrocardiograph. During 1931, Dr. Maloney told the patient that he had heart trouble— that he was suffering from spasms of the coronary vessels, but after an examination on September 7, 1934, the doctor told Jones that he found no evidence of pathology. Dr. Colvin took another electrocardiograph on September 8, 1934, which showed a curve within normal limits and therefore did not indicate anything abnormal. A copy of this electrocardiogram was inclosed in a letter dated October 31,1934, which was sent to plaintiff by its agent Miller.
On September 25, 1934, Jones went to the University Hospital at Ann Arbor. He was in the outpatient department and returned at intervals. During his first visit he was carefully examined by Dr. Freund who found his heart normal. But a diagnosis on November 12, 1935, showed a heart condition — arteriosclerotic heart disease, slight cardiac enlargement, angina pectoris. The insured, on April 16, 1936, visited an osteopathic physician and when Jones was asked “ ‘how long have you had these so called heart symptoms,’ replied, ‘Approximately two years.’ ” The osteopath’s diagnosis revealed an irritable heart caused by fatty degeneration. But on October 24, 1936, the last time insured was treated by the osteopath, there were no chronic symptoms of heart condition. At the age of 43, coronary thrombosis caused insured’s death on October 25, 1936.
From this evidence it is clear that the representations and answers in the application were false. If they had been truthful the policy would not have been issued until an investigation had been made.
Defendant contends that plaintiff had knowledge of insured’s physical condition and consequently the false answers are immaterial and plaintiff is es-topped from asserting’ its reliance upon them. Before the issuance of other policies to the insured in 1933 and 1934, and the policy in suit in 1935, the plaintiff’s doctor examined Mr. Jones but discovered no heart trouble. In 1934, a policy was issued in which waiver of premium and total disability benefits were asked. Plaintiff’s .underwriting department denied the waiver of premium benefits because of certain medical features which when explained referred to insured’s history of sugar. Subsequently Mr. Jones submitted to a laboratory test which showed a perfectly normal reaction. On the basis of this report and a letter from Mr. Miller, agent of plaintiff, which detailed the canse of the sugar previously found as the result of eating a quantity of sweets at a party the night before, plaintiff issued the waiver of premium benefits but declined to issue the total disability benefits. Plaintiff is a member of the recording and statistical bureau to which reports are submitted by the insurance companies concerning the physical conditions of those they examine for the purpose of issuing insurance. From this bureau, plaintiff, at the time of issuing’ the policy in suit, had the following data about Mr. Jones:
“Mr. Jones had been overweight in 1926; he was 5 feet 5 inches, and weighed 189 pounds. In 1927 some examiner found sugar in his urine. In April, 1927, he had a carbohydrate test, that is, he was given sugars to see how he handled them. There was another test in July, 1927; that test was satisfactory. Between April and July there is also a record of a trace of albumin being found in the urine. It must have been very small as the amount is not recorded. The date of the finding was April, 1927. The date of the examination without finding was July, 1927.
“In November, 1928, the applicant had lost weight. His weight then was 176 pounds. On February 13, 1929, there was no sugar found in his urine. In March, 1932, it was reported that he had had an attack of vertigo, or syncope, which means dizziness, syncope means occasional fainting; one attack within one year; so it must have been 1931 when he suffered this attack. At the same date he was reported to have had some trouble with his nose or throat, possibly including diseases of the sinus, we don’t know; general classification of the diseases of the nose, throat and so on. And the last information we have about Mr. Jones from the bureau was that on the 31st day of May, 1933, a faint trace of albumin was accidentally found in his urine, 10 milligrams being the amount, which is negligible even with an ordinary person.
“We wrote to the company which reported this incident of vertigo, and received information to this effect: ‘ This man gave a history of having had streptococcic sore throat in July, 1931, which lasted for a period of 15 days. His attending physician advised that for five weeks the man suffered from this sore throat prostration, and also from some vertigo,’ which simply means dizziness. With that explanation, there was nothing that would materially affect the risk. Vertigo is very common with septic infection. It did not cast any suspicion on the heart.”
Defendant asserts that the electrocardiogram received by plaintiff in October, 1934, disclosed the fact that Jones had consulted a doctor and put plaintiff on notice of any heart trouble. However, this electrocardiogram shows curves within normal limits and does not reveal a heart condition, nor does it show that Jones regularly sought medical attention thereafter.
Notwithstanding the record reveals a knowledge of insured’s condition in certain respects, still there is nothing in the record indicating any knowledge on the part of the plaintiff, at the time of issuing this policy, that insured had repeatedly consulted physicians, nor that plaintiff had any reason to suspect a heart condition. This record conclusively shows the insured did knowingly falsely answer some of the material questions in the application. It is not essential, however, that we find actual fraud. Misstatements made in good faith which materially affect acceptance of the risk constitute sufficient grounds for cancellation, of the policy. 3 Comp. Laws 1929, § 12444 (Stat. Ann. § 24.280); National Life & Accident Ins. Co. v. Nagel, 260 Mich. 635; Prudential Ins. Co. of America v. Ashe, 266 Mich. 667.
The evidence clearly shows that as late as November, 1935, Jones consulted physicians concerning his condition and at that time a definite, heart disturbance was revealed. His statement to the osteopath that he had had these heart symptoms for two years indicates his knowledge of his own condition at the time he made application for the insurance in question. In Bellestri-Fontana v. New York Life Ins. Co., 234 Mich. 424, we said:
“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. ’ ’
Such statements in Jones’s application were material. They definitely affected the assumption of risk by the plaintiff. In the absence of any showing that plaintiff had knowledge beyond the limits hereinbefore detailed, the circuit court in chancery properly decreed cancellation. The decree is affirmed. Costs granted to appellee.
"Wiest, Bushnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. Buteel, C. J., did not sit. | [
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North, J.
In behalf of the auditor general of the State of Michigan the attorney-general filed a petition in the probate court of Allegan county in the estate of Benjamin Lugies, now deceased; but who since February 13, 1912, had been committed as a mental incompetent in the Kalamazoo hospital. The purpose of filing the petition was to obtain reim bursement for the State of Michigan for its expenditures in maintaining the deceased mental incompetent person from the time of his commitment to the date of his death, September 29, 1936. On appeal from decision in the probate court to the circuit court the claim was allowed in the amount of $4,350.35, this being the total expense from August, 1923, to the date of Lugies’ death. From the judgment so entered the auditor general appealed and the administrator of the estate of the deceased perfected a cross-appeal.
Except as hereinafter noted, all of the questions raised in the instant case are covered by our decision in the matter of the Estate of Mary T. Lewis, a mental incompetent, ante, 179. The decision of the circuit judge was in full accord with the holdings of this court in the Lewis Case, and therefore the decision herein should be affirmed, unless modification is necessitated by the question hereinafter considered.
The record in the instant case discloses that on the 30th day of September, 1926, the prosecuting attorney of Allegan county acting under the statute (2 Comp. Laws 1929, § 6893 et seq. [Stat. Ann. § 14.816 et seq.]) filed a petition in the estate of Benjamin Lugies, mentally diseased, asking that said estate be subjected to payment to Allegan county and the State of Michigan of expenses paid and to be paid by them in behalf of said Benjamin Lugies. On October 20,1926, an order was entered in the probate court in said proceedings by which it was provided that $150 per year should be paid by said estate to the auditor general toward reimbursing the State of Michigan for the expenses incurred by it or to be incurred by it in behalf of Benjamin Lugies. The order fixed the time at which such rate of payment should begin as November 1, 1925. The order further provided for its modification on the petition of either party, and also that it should not prejudice the right to file and establish a claim for the period prior to November 1, 1925.
No appeal was taken from this order. It is conceded no payments were made thereunder. On behalf of the cross-appellant in the instant case one of the assignments of error is that:
“The court erred in not limiting the claim of the State of Michigan to the sum of $150 per year for the period commencing November 1,1925 and ending September 29,1936.”
In support of this assigned error cross-appellant asserts that the order of the probate court in the former proceedings fixing the amount to be paid by the estate of the incompetent from and after November 1, 1925, is res judicata, and the circuit judge in the instant case was in error in allowing recovery in excess of $150 per year from November 1,1925, to September 29,1936, the date of Lugies ’ death.
As above noted, no appeal was taken from the former order of the probate judge fixing the amount to be paid at $150 per year, nor has a petition ever been filed for modification of this order. It continued in full force and effect from November 1, 1925, until Lugies’ death. In a legal sense the same parties and the same subject matter are involved in the instant ease as were formerly before the probate court, in so far as the period subsequent to November 1, 1925, is concerned.
A matter once fully adjudicated is conclusively adjudicated, as between the parties and privies. Hazen v. Reed, 30 Mich. 331. A judgment is res judicata upon the points directly involved and determined therein in a subsequent suit between the same parties. Harris v. Clark, 74 Mich. 334. Decrees and orders of the probate court, made in the exercise of its jurisdiction, are as final and conclusive as those of any other court. Burgess v. Stribling, 134 Mich. 33.
The contention of the cross-appellant of res judicata must be sustained. It follows that the judgment entered in the circuit court must be vacated. It is conceded that for the period from August 28, 1923, to November 1,1925, the State is entitled to recovery at the rate fixed by the circuit court. But by reason of its having been previously adjudicated, the limit of the State’s right to recover from November 1, 1925, to September 29,1936, is at the rate of $150 per year. The case is remanded to the circuit court for entry of judgment in accordance herewith and for certification thereof to the probate court of Allegan county. Defendant’s costs on this appeal may be deducted and paid out of the amount otherwise due the State.
Bttxzel, C. J., and Wiest, Bushnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. | [
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Boyles, J.
These consolidated appeals involve the question whether, under the circumstances here, a “floor plan” chattel mortgage given by an automobile dealer to a finance company covering automobiles in the dealer’s stock for sale, is a valid lien as against subsequent purchasers of such automobiles, without actual notice or knowledge of such lien. These two plaintiffs purchased automobiles from the defendant Dave Collier, an automobile dealer, which were covered, by properly filed floor plan chattel mortgages which he had executed to the defendant Contract Purchase Corporation. Subsequently, and while plaintiffs were not in default in paying for their purchases, the finance company, claiming default in payments due it from the mortgagor-dealer, seized possession of the automobiles. Thereupon plaintiffs filed separate bills of complaint in chancery to enjoin the defendant finance company from disposing of said automobiles, to compel their return, and for damages for loss of use during the detention. The defendant Contract Purchase Corporation answered and contested, the cases were consolidated for hearing, and decrees were entered directing said defendant to return the automobiles or in case of failure thereof to pay plaintiffs the values of the automobiles as found by the court. The decrees also ordered said defendant to pay plaintiffs certain damages for loss of use of the automobiles. The record does not indicate what disposition was made "of the cases as to defendant Collier. The defendant Contract Purchase Corporation appeals.
There is no dispute as to the essential facts. On November 30, 1945, defendant Dave Collier sold a used 1942 Pontiac sedan to the plaintiff Blanche Daas. Plaintiff Daas was allowed $772.84 for a used 1940 Oldsmobile coupe which she traded in, and she gave Collier an instalment contract for the balance of the purchase price. The existing certificate of title of the Pontiac sedan, which was in Collier’s possession, showed that it had been assigned to him, free from lien, by one Davis, the former owner, on November 23, 1945. Collier, as a registered dealer, reassigned the title to plaintiff Daas on December 1, 1945, without showing the floor plan mortgage lien. The reassignment of the certificate of title not disclosing that there was such a lien, the secretary of State issued a certificate of title to plaintiff Daas for said automobile, showing that it was free and clear of lien in so far as said floor plan mortgage was concerned.
On December 14, 1945, the plaintiff Cicero Scott purchased a 1941 Cadillac four-door sedan from Collier for $2,078.48, trading'in a Buick for $800, the balance now being financed through another company. Subsequent transactions relating to the assignment of the existing certificate of title by Collier do not appear in the record but, as admitted by appellant, followed the same course as in th.e case of plaintiff Daas.
At the time these sales were made by Collier these automobiles were subject to the prior floor plan mortgages referred to herein. The Daas automobile was mortgaged by Collier to the Contract Purchase Corporation on November 23, 1945,. together with four other automobiles, to secure a demand promissory note given by him for $4,780, of which loan $1,155 was prorated to the Pontiac (Daas) car. The Scott automobile was mortgaged by Collier to Contract Purchase Corporation on • November 17, 1945, together with two other automobiles, to secure payment of a note given by Collier the same date for $3,385, of which $1,530 was' prorated to the Cadillac (the Scott car). These floor plan mortgages were filed with the register of deeds for Wayne county November 21 and'November 26, 1945, respectively. Both'were on file at the time plaintiffs made their respective purchases from Collier.
Unfortunately, Collier did not pay off the floor plan mortgages on these two automobiles and get releases from the finance company. - The secretary of Contract Purchase Corporation testified:
“In 'the course of custom and usage, the dealer is supposed to pay the indebtedness, or amount due on any particular automobile at the time it is sold, or as a simultaneous transaction with the sale. We do not tolerate any lapses or delays between the sale and the payment of the loan. When we learn of such delays, we either call the dealer to the office,’ or go out to see him, to show him where he is in default, and demand, immediate payment foY any shortages that may exist at that time. If any payment is made we put him on notice that such practice- cannot continue. We contemplate that those cars will be sold by Mr. Collier, to whoever comes in there to purchase an automobile. I guess we don’t expect him to tell that person that he owes us $1,155 on the Pontiac. Apparently he has the control of that car to all intents and purposes when the person comes in, and we expect him to sell the car, and immediately pay us. We don’t expect him to call the attention of the purchaser to the fact that he owes -us money. * * * If he sells it, and allows it to be removed from his premises, coupled with nonpayment to us at the same time, it constitutes a default. The only notice we give the customer is through the recording of the mortgage. We never had the"property or the title to hand over. We knew he had the title to the property, and the title is the way in which he would transfer this property to the customer. - If he did 'hand it over to the purchaser, without paying the mortgage, we would have a right to foreclose on the mortgage. That is the way this business is conducted all the way around the city of Detroit, for years and years., Some of the finance companies hold the title, so that when the transfer is made, they actually know about it. They are in a minority, and don’t do it in every instance. They may hold the title if they feel the account is worth working with, hut they don’t have a complete feeling of trust toward that account, but not as a general practice. We are dealing with this dealer, and are likewise trying to get him in a position where he can do business in the ordinary flow of business in the used car line. If he had to disclose to the customer that we had a mortgage on a particular car which he represented to be free and clear, it might create some sales resistance. I don’t know that that is the reason we do business in this way. It follows logically.
“Contract Purchase Corporation relies only on the filing laws to protect its security. An unscrupulous dealer can lead the customer astray, when we leave the title in the hands of the dealer, and allow him to go ahead and sell.”
The Contract Purchase Corporation had a checkup system whereby it checked the dealers approximately every 10 days, sometimes • once a week. This checkup system consisted of having an inspector go to the sales lot of Collier, and physically check the cars on which there were outstanding mortgages. When the checkup system followed by Contract Purchase Corporation disclosed, in December, 1945, that the two automobiles here involved were missing from Collier’s lot, efforts were made to trace them. It was not until the latter part of February, 1946, that it was definitely learned by appellant that the cars had been, sold by Collier. On February 18, 1946, Collier had given a check to Contract Purchase' Corporation for $9,015 specifying that a part of it was to be applied to release the floor plan lien on the Cadillac, but the check was dishonored and never collected.
The record indicates that there was some misunderstanding or mix-up between Collier and the company as to the crediting of payments. It was the understanding of Collier when he sent checks in to the Contract Purchase Corporation that in line of sale'the first car sold was the first one that the money was to apply on. Over $100,000 was paid by Collier to the Contract Purchase Corporation after November 30, 1945, the date on which the car was sold to Daas, and during the ensuing two and one-half months. Collier’s average outstanding debt to the company was between $50,000 and $60,000. The total amount of the two floor plan mortgages on eight automobiles, which included the two here in question,,was $8,165. Plaintiffs’ two automobiles were mortgaged for $2,685. The record does not satisfactorily explain why the floor plan mortgage liens were not released on these two automobiles, out of the $100,000 subsequently paid to appellant by the dealer.
Whatever may have been the merits of the controversy between Collier and the company, the fact remains that the mortgagee did not release the two automobiles in question from its claimed liens. Early in March, 1946, the company took the two' automobiles away from plaintiffs, and presumably still has them, due to restraining orders issued by the circuit judge in March, 1946, when the bills of complaint were filed.
The appellant Contract Purchase Corporation claims that the filing of the chattel mortgages in the register of deeds’ office is constructive notice to the world and to the public, and that it has the right to enforce its liens because the mortgages were so filed. The precise question here is whether the appellant.finance company, mortgagee under properly filed floor plan mortgages covering automobiles left in possession of the dealer-mortgagor, to be placed in stock by him and sold to the dealer’s customers in the usual course of business, allowing the dealer to transfer certificates of title without disclosing the liens, leaving it to the dealer to thereafter pay the mortgages and obtain releases from the liens after tb,e sale and transfer of title, can thereafter claim the automobiles from purchasers' who had received a clear transfer of title from the dealer, without any actual notice or knowledge of the liens. In the case at bar, there is the further circumstance that the appellant made frequent periodical checks on the automobiles in the dealer’s possession, received payments amounting to about $100,000 from the dealer during the two and one-half months following the sales to plaintiffs but failed to release plaintiffs’ automobiles from the liens because of some mix-up in the financial affairs between the dealer and the appellant-mortgagee. There is the further circumstance that appellant dispossessed plaintiffs of the automobiles some three months after the purchase, when plaintiffs had obtained certificates of title from the secretary of State without showing the liens.
In so far as it bears on the issue before us, the statute on which appellant relies provides that every chattel mortgage which is not accompanied by an immediate delivery followed by actual and continued change oí possession of the things mortgaged shall be void as against subsequent purchasers in good faith of the things mortgaged, unless filed in the office of the register of deeds. 3 Comp. Laws 1929, § 13424 (Stat. Ann. § 26.929).
Appellant claims that our decisions have settled the question in this State, and that there is no occasion to resort to authority from other jurisdictions. However, the instant eases involve the rights of purchasers who have purchased automobiles from the dealer-owner, where the mortgagee under a floor plan chattel mortgage given by the dealer-owner covering automobiles leaves them in the possession of the mortgagor-owner for sale in the regular course of business, with the power to sell and to transfer title without indicating* any lien, subsequent to which sale the mortgagor is supposed to make a, payment to the mortgagee and thereby secure a release of the automobiles from, the liens. The decisions of this. Court on which appellant relies have not heretofore settled this question.
In National Bond & Investment Co. v. Union Investment Co., 260 Mich. 307, the Court held that where a dealer sold, on a conditional sales contract, an automobile which was covered by a floor plan mortgage, and then assigned the conditional sales contract, the assignee took subject to the rights of the mortgagee under the floor plan mortgage. Mr. Justice Wiest, writing for the Court in that case, expressly refrained from expressing any opinion on the precise question here before us, as follows (p. 308):
“Defendant reviews by appeal, presenting the issue of right of priority between the two finance corporations. Right's of the purchaser of the car from the dealer are not here in issue or presented. ’ ’
The precise question here for decision was .again left unanswered by Mr. Justice Butzel, writing for the Court in People v. Etzler, 292 Mich. 489, as follows (p. 492):
" “It is claimed that the trial court erred in not permitting defendant to show that-it was the practice of the finance company to permit the sale of the cars covered by the floor plan mortgage before the dealer secured a release or discharge, and that if such practice were proved, the finance company must be held to have waived its lien in favor of the purchaser who had no actual knowledge of the recorded incumbrance. The exact point in controversy has not yet been before this Court, although we have protected a mortgagee of automobiles, as against the mortgagor’s assignee, where there was proper recording (National Bond & Investment Co. v. Union Investment Co., 260 Mich. 307), and have 'declined protection for failure to record (Becker v. La Core, 211 Mich. 684; Motor Bankers Corp. v. C. I. T. Corp., 258 Mich. 301). Decisions in other jurisdictions are far from unanimous. *' * * Because we hold that the so-called chattel mortgage failed at its inception to create an incumbrance, we decline to discuss further-the question raised.” .
Tn considering the statute law, consideration must be given to a significant change made in 1935. When the National Bond & Investment Company decision was handed-down in 1932, the statute law (3 Comp. Laws 1929, § 13424), contained the following:
“ Provided further, That when such mortgage or other conveyance intended to operate as a mortgage is given upon a stock of merchandise or merchandise and fixtures or any part -thereof purchased for resale at retail then such instrument or a true copy thereof, and of the affidavit thereto, attached shall also be filed in the offiee of the register of deeds of the county where the goods and chattels are located. ’ ’
This provision was retained in Act No. 18, Pub. Acts 1934 (1st Ex. Sess.), effective March 28,1934.* However, it' was eliminated by Act No. 129, Pub. Acts 1935, and has not since appeared in the statute law. See Comp. Laws Supp. 1940, § 13424, Stat. Ann. § 26.929. Nor does the dissimilar statute (2 Comp. Laws 1929, § 9550 [Stat. Ann. §19.381]), referred to by appellant, which applies to the filing of title-retaining conditional contracts for the purchase and sale of personal property, have any decisive effect on the question before us. The distinction between the two statutes is pointed out in Mills Novelty Co. v. Morett, 266 Mich. 451.
Appellant cites and relies on decisions of this Court holding that one can not be a bona fide purchaser in good faith and- without notice, of personal property covered by a chattel mortgage properly filed. Such a case is Pinconning State Bank v. Henry, 258 Mich. 44. The ease of Saginaw Financing Corp. v. Detroit Lubricator Co., 256 Mich. 441, cited by appellant, does not involve a floor plan mortgage, or the transfer of a certificate of title, and is distinguishable from the instant case on ihe facts. We believe that the precise question now before us Can not be answered, as insisted by appellant, by a statement that the filing of the chattel mortgages was notice and that therefore plaintiffs could not be bona fide purchasers for value without notice. It may be assumed that such is a correct statement of the general principle of law. It has been so held in Saginaw Financing Corp. v. Detroit Lubricator Co., supra; Pinconning State Bank v. Henry, supra; Motor Bankers Corp. v. C. I. T. Corp., 258 Mich. 301; National Bond & Investment Co. v. Union Investment Co., supra; People v. Etzler, supra; Stamler v. Universal Ins. Co., 305 Mich. 131. But beyond the general statement of law, we have the question here, not yet settled by this' Court, whether the doctrine of invalidity of the floor plan mortgage as applied to these plaintiffs under the circumstances of this case, or of waiver or estoppel of the appellant to assert its floor plan liens as against the plaintiffs herein, operates to free the two automobiles here involved from appellant’s claim of liens. The question goes beyond the mere issue whether the plaintiffs are bona fide purchasers without notice. Has the appellant finance company, by the course of its transactions With the dealer, and by its methods of business, placed itself in such a position that the Court must consider it has waived any right to hold the automobiles sold to these plaintiffs for any balance due it from the dealer. The record is convincing that by these transactions and the method of doing business between the finance company and the dealer, appellant has put it in the power of the dealer to mislead the purchasers, and to perpetrate a fraud.
While appellant insists upon relying on the decisions in this State, which as we have,said do not answer the question here, appellant admits that some decisions from other States seem to be to the contrary. Counsel for appellant, in their brief, say:
“It is plain from reading Judge Webster’s opinion that he fell under the spell of the line of authority which holds that one who lends money on the security of a lien upon personal property held by a dealer for resale, cannot enforce the lien as against a purchaser from the dealer without actual knowledge of the lien. This is the same question that was reserved by this Court, in deciding the case of National Bond & Investment Co. v. Union Investment Co., supra. That this line of authority is both voluminous and respectable, can not be gainsaid. Notes in 73 A. L. R. 236, 97 A. L. R. 646, and 136 A. L. R. 821 collect and review literally hundreds of cases on the subject, the first under the title ‘Validity of chattel mortgage where mortgagor is given right to sell,’ the second under ‘Chattel mortgagee’s consent to sale of mortgaged property as waiver of lien’ and the third under ‘Record of chattel mortgage on, or conditional sale of, automobile or other cháttel left in hands of dealer, as constructive notice.’ ”
In disposing of the question Judge Arthur Webster in his opinion made the following observation:
“As between a mortgagee who suffers a loss because of the dishonesty of a dealer, and a purchaser who is asked to suffer the same loss, I believe that of the two who suffered he who placed it in the power of the dealer to work the fraud must be held to be responsible for it, and that the purchaser who had nothing to do with this situation should not be held responsible for it.”
Many authorities were cited by Mr. Justice Butzel in People v. Etzler, supra, where the question has been considered. Admittedly the decisions in other jurisdictions, and authorities who have written on the subject, are not in entire agreement. Under the circumstances of the two cases now before us we adhere to the conclusion that appellant did not have the right to enforce its liens as to plaintiffs, for the purpose of collecting on the default of defendant Collier under the floor plan mortgages. The weight of authority plainly is to that effect. In support of this conclusion are the following decisions from other jurisdictions expressly relating to liens on, and sales of, automobiles: Bernhagen v. Marathon Finance Corp., 212 Wis. 495 (250 N. W. 410); Boice v. Finance & Guaranty Corp., 127 Va. 563 (102 S. E. 591, 10 A. L. R. 654); Denno v. Standard Acceptance Corp., 277 Mass. 251 (178 N. E. 513); Coffman v. Citizens' Loan & Investment Co., 172 Ark. 889 (290 S. W. 961); Kearby v. Western States Securities Co., 31 Ariz. 104 (250 Pac. 766) ; Moore v. Ellison, 82 Col. 478 (261 Pac. 461); Gramm-Bernstein Motor Truck Co. v. Todd, 121 Wash. 145 (209 Pac. 3); Indiana Investment & Securities Co. v. Whisman, 85 Ind. App. 109 (138 N. E. 512); Helms v. American Security Co. of Indiana, 216 Ind. 1 (22 N. E. [2d] 822); National City Bank of Rome, Ga., v. Adams, 30 Ga. App. 219 (117 S. E. 285); Luther v. Lee, 62 Mont. 174 (204 Pac. 365); Martin v. Duncan Automobile Co., 50 Nev. 91 (252 Pac. 322); Jones v. Commercial Investment Trust, 64 Utah, 151 (228 Pac. 896); Howell v. Board, 185 Okla. 513 (94 Pac. [2d] 830); Fogle v. General Credit, Inc., 74 D. C. App. 208 (122 Fed. [2d] 45, 136 A. L. R. 814); Winakur v. Sapourn, 156 Md. 662 (145 Atl. 342); Hostetler v. National Acceptance Co., 36 Ohio App. 141 (172 N. E. 851); Atlantic Discount Corp. v. Young, 224 N. C. 89 (29 S. E. [2d] 29).
See, also, 42 Harvard Law Review, p. 573 (February, 1929); 80 University of Pennsylvania Law Review, p. 755 (March, 1932); 2 Rocky Mountain Law Review, p. 261 (June, 1930); 97 A. L. R. p. 646 (Chattel mortgagee’s consent to sale of mortgaged property as waiver of lien); 136 A. L. R. p. 821 (Record of chattel mortgage on, or conditional sale of, automobile or other chattel put or left in hands of dealer, as constructive notice).
If we should uphold the contention of the appellant here, under the circumstances of these appeals, any purchaser of an automobile from a dealer in the regular course of the dealer’s business would have to first ascertain the engine and serial numbers of the automobile and then check the same with the files and records in the office of the register of deeds, for possible liens, or otherwise purchase at his own risk. Furthermore, if we should hold that appellant’s liens are good as against plaintiffs’ titles, the situation here would be further complicated by the fact that both plaintiffs transferred the titles of automobiles to the dealer as down payments on their purchases, which titles may have been, or can be, transferred to others by the dealer. Further complication would result from the fact that the plaintiffs executed instruments for instalment payments on their purchases, for the balance of their purchase price, with liens on the automobiles to secure payment thereof, which are now in the hands of other holders. Pertinent here is what was said in Be Petition for Dissolution of Willys-Detroit, Inc., 287 Mich. 689, as follows (pp. 696, 697):
“We cannot more clearly express our attitude toward transactions of this nature than by quoting with approval the following from. Root v. Republic Acceptance Corp., 279 Pa. 55 (123 Atl. 650):
“ ‘The complicated dealings between many of those trafficking in, and loaning money on, automobiles have reached a point where the courts must strip transactions of their pretenses and look at them as they really are, with the camouflage of papers giving a similitude of the passing of title removed, or they will be dealing with fictions instead of facts. Those who buy and sell, bail and loan money on motor vehicles must be given to understand that the realities of their transactions will be sought for by the courts; they will look through the screen of paper titles to ascertain what was the real situation.’ ”
The decrees are affirmed, with costs to appellee Blanche Daas, but without costs to appellee Scott who has not filed a brief in this Court.
Carr, C. J., and Btjtzed, Bushnell, Sharpe, Reid, North, and Dethmers, JJ., concurred.
Amending 3 Comp. Laws 1929, § 13424.—Reporter. | [
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Care, C. J.
Plaintiff in this case brought suit for injunction on June 22, 1944, seeking to restrain the use of certain premises in violation of the township zoning ordinance. The defendant Full Salvation Union, an ecclesiastical corporation formed under the laws of the State of Michigan, is the owner of the premises in question, and defendant Andrews is in charge thereof as the agent of the corporate defendant. Defendants, by answer to the bill of complaint, raised issues involving the interpretation of the ordinance, its validity as construed by the officers of the township, the right of the plaintiff to seek equitable relief, and other matters not of controlling importance. Following trial in circuit court, a decree was entered for plaintiff in accordance with the prayer of the bill of complaint, and defendants have appealed.
The ordinance in question went into effect on January 16, 1942, It was adopted pursuant to the provisions of Act No. 302, Pnb. Acts 1937, as amended by Act No. 69, Pnb. Acts 1939 (Comp. Laws Snpp. 1940, § 2651 — 11 et seq., Stat. Ann. 1942 Cum. Supp. §§5.2962 [l]-5.2962 [12]). Said act was repealed by Act No. 184, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 2651-71 et seq., Stat. Ann. 1946-Cum. Supp. §§5.2963 [l]-5.2963 [31]). By specific provision of section 26 of the repealing act, however, ordinances previously adopted by townships under the act of 1937 remained in full force and effect subject to the adoption of a new ordinance relating to the subject matter.
The general purpose of the act under which plaintiff’s zoning ordinance was adopted was indicated by the title which read as follows :
“An act to provide for the establishment in certain organized townships of districts or zones lying wholly outside of the corporate limits of cities and villages, within which districts or zones the use of land, natural resources and structures, the height, the area, the size and location of building’s may be regulated by ordinance, and within which districts regulations may be established for the light, ventilation, sanitation and protection of such buildings, and within which districts the density of population may be regulated by ordinance; to provide for the administering of this act, and for a planning board; to provide penalties for violation; to provide against conflict with State housing’ code or other acts, ordinances or regulations; to provide for the collection of building permit fees in benefited districts and of taxes therefor; to provide for petition, public hearing and a referendum by the electors.”
The ordinance in question divides the township into five so-called “use districts,” designated as “A” residence district; “B” residence district; “C” local business district; “D” commercial and industrial district; “E” industrial district. The premises involved in the instant case are located wholly in districts “A” and “B.” The ordinance permits buildings in district “A” for private and two-family dwellings, churches, public schools, libraries, and accessory buildings incident to any one of the authorized uses. In district “ B ” the same uses are expressly authorized as for district “A” and in addition thereto farming and truck gardening, multiple dwellings, hotels, private clubs, fraternities and lodges, boarding houses, hospitals, educational, philanthropic and eleemosynary institutions, nurseries and greenhouses, buildings and uses accessory to those expressly enumerated when located on the same lot and not involving the conduct of a retail business, public garages for storage purposes only, and golf courses. The requirements imposed with reference to light, ventilation, sanitation and protection specify that every dwelling shall have windows so located as to properly light and ventilate all portions of the rooms. Outside toilets are forbidden except for temporary use during construction work on the premises, and each dwelling is required to be provided with “running water, adequate inside water-closet accommodations, and sewage facilities. ’ ’ The ordinance further directs that each dwelling shall be placed upon a substantial foundation of mortar and stone, brick, concrete or other like material, with joists not less than one foot off the ground. The use of tents, house trailers and automobile trailers for dwelling purposes is forbidden, subject to the provision that a trailer may be used for a total period of not more than 14 days in any one year by a single family, when such trailer is located upon premises having running water and sewage facilities.
The ordinance further makes provision for building permits, for fees therefor, and for enforcement of its provisions by tbe supervisor of tbe township. A board of appeals is created to function in accordance witb tbe provisions of tbe enabling act. A penalty by way of fine is provided for any violation of tbe ■ ordinance, witb authority in tbe court imposing tbe fine to require imprisonment in tbe county jail until tbe same is paid, not exceeding 30 days.
The defendant Full Salvation Union acquired title to a part of tbe premises in question in November, 1942, pursuant to a land contract executed in May preceding. Tbe balance of tbe land was purchased in June, 1943. Tbe tract owned by tbe defendant is approximately 16% acres in extent. Following tbe execution of tbe land contract in May, 1942, tbe defendant corporation applied for and obtained a building’ permit for tbe construction of a tabernacle for religious purposes. A permit was also obtained for a caretaker’s residence. These1 buildings were completed in tbe summer of 1942 and thereafter a camp meeting was held on tbe premises for a period of about two weeks. A number of small. buildings were erected on tbe grounds, to.be used as temporary dwellings by members of tbe Full Salvation Union during- tbe meetings. Other small buildings were brought on tbe premises fot tbe same purpose, and tents and bouse trailers were also used. During tbe camp meeting period tbe corporate defendant provided persons attending witb meals. It is claimed that this service was rendered at cost and not for tbe purpose of making any financial profit. No building permits were obtained for any of tbe smaller residences. In tbe summer of 1943 a camp meeting was conducted on tbe premises for a somewhat longer period than that held during tbe preceding year. Tbe buildings and tents in question were used for residential purposes and it appears that such use was continued in one or more instances following the termination of the camp meeting. As above noted, the suit for injunctive relief was instituted-in June, 1944.
The trial court, after listening to the proofs of the parties, concluded that the defendants had deliberately and persistently violated the township ordinance and had by their acts created a nuisance. Injunctive relief to prevent further violations and a continuation of the nuisance found to exist was granted and defendants were further ordered to remove within 30 days all structures erected in violation of the terms of the ordinance.
It is the claim of the defendants on appeal that the use made of the premises as established by the proofs was not in violation of the terms of the ordinance. Such contention, however, is not tenable. The small buildings, referred to in the record as shacks, constructed on the property or brought there for residential purposes, clearly did not comply with the requirements of the ordinance with reference to construction, sanitation, and required facilities. Such structures cannot be regarded as accessory to any other building lawfully erected on the premises. Obviously, their purpose was to facilitate the carrying on of the camp meeting. The same conclusion follows with reference to the tents which defendants permitted to be erected on the premises and which the record indicates members of the Full Salvation Union were invited to bring with them to the camp meeting. It is obvious, also, that the camp meeting itself was an unauthorized use of the premises on which i't was conducted. In effect, defendants contend that because such meeting was held for religious purposes, it should be placed in the same category as churches which, as above noted, the ordinance expressly authorizes. However, the conclusion does not follow that every place in which religions services are conducted is a church. Starks v. Presque Isle Circuit Judge, 173 Mich. 464 (43 L. R. A. [N. S.] 1142, Ann. Gas. 1914D, 773). "Webster’s New International Dictionary (2d Ed.), defines a church as “A building set apart for public worship, esp. Christian worship.” The term was-clearly used in the ordinance before us with such meaning in mind. The term “camp meeting” implies a religious gathering for the purpose of conducting a series of religious services, usually in the open air or in a tent, lasting for several days, during which persons attending live in tents or temporary houses. Johnson v. Jones, 86 Vt. 167 (83 Atl. 1085); Commonwealth v: Bearse, 132 Mass. 542 (42 Am. Rep. 450). The term necessarily implies that part or all of those attending the meeting shall “camp,” in the ordinary'meaning of that word. Defendants’ meetings were conducted in this manner, many of those attending using the small buildings or shacks referred to, and tents, for residential purposes.
The record before us indicates rather clearly that the camp meetings conducted by defendants were attended with such degree of noise as to cause disturbance to others residing in the vicinity. There is testimony to the effect that such noise continued from early in the morning until approximately 4 a.m. the following day. It cannot be said that such use was within the contemplation of the ordinance.
This brings us to a consideration of the principal question in the case, the validity of the zoning ordinance. Defendants claim that as construed by the township officials and by the trial court it is not a proper exercise of the police power of the State because “unreasonable, arbitrary and discriminatory.” Defendants further assert, as appears from their answer, that said ordinance operates to deprive them of property without due process, of law in violation of the Constitution of the United States (14th Am., §1) and the Michigan Constitution (1908), art. 2, § 16. That the ordinance must stand the test of reasonableness is not disputed. However, the presumption is in favor of validity. Courts may not properly invalidate a statute or ordinance unless the constitutional objections urged against it are supported by competent evidence or appear on the face of the measure in question. In Harrigan & Reid Co. v. Burton, 224 Mich. 564 (33 A. L. R. 142), it was said (p. 569):
“The generally accepted rule is that a presumption prevails in favor of the reasonableness and validity in all particulars of a municipal ordinance unless the contrary is shown by competent evidence, or appears on the face of the enactment. ’ ’
See, also, City of East Lansing v. Smith, 277 Mich. 495.
In Austin v. Older, 283 Mich. 667, the general rule was stated as follows (p. 674):
“It is elementary that every intendment is in favor of the constitutionality of an ordinance and plaintiff has the burden of showing that it has no real or substantial relation to public health, morals, safety or general welfare: Zoning ordinances are constitutional in principle as a valid exercise of the police power.”
Of like import is Moreland v. Armstrong, 297 Mich. 32.
Defendants cite and rely on Senefsky v. City of Huntington Woods, 307 Mich. 728 (149 A. L. R. 1433). There the plaintiff instituted mandamus proceedings to compel the defendant city to issue a building permit which had been refused because the contemplated residence contained less than the usable floor, space specified by- the city zoning ordinance. It was held by this Court that the requirement, as applied to plaintiff’s property, was unreasonable under the particular facts involved because having no tendency to advance or protect the public health, morals, safety or general welfare. A somewhat similar situation was presented in Frischkorn Construction Co. v. Redford Township Building Inspector, 315 Mich. 556. The-facts in the case at bar, however, serve to differentiate it from the cases cited. The provisions of plaintiff’s zoning ordinance, involved in this case, qannot be said to be unrelated to the public health and welfare. The ■ requirements as to'water, light and sanitation, above noted, clearly were incorporated to serve proper purposes well within the scope of the police power. It cannot be said that they do not reasonably serve such purposes. Neither does it appear that the restrictions as -to the use of premises located in districts “A” and “B” are not reasonably within the scope of the authority vested in the township under the act of the legislature. Applying the general principle suggested by the decisions above cited, we find that the provisions of the ordinance,in question, to which defendants object, are valid.
Defendants further claim that equity is without jurisdiction to grant the relief sought by plaintiff because the ordinance contains no provision expressly authorizing, seeking, or issuing, an injunction against violations of the ordinance. Attention is directed to Township of Warren v. Raymond, 291 Mich. 426. There the plaintiff sought to enjoin the defendant from operating a junk yard without complying with the! requirements of a township ordinance entitled:
• “An ordinance to license and regulate junk dealers and junk yards and the collection and depositing of junk in the township of Warren.”
Said ordinance contained no provision for its enforcement by injunction. This Court recognized the general rule that equity has not the power to restrain violations of criminal statutes or ordinances unless the specific facts involved form a basis for equitable relief. Attention was called to.the fact that the wrecking of automobiles is not a public or private nuisance per se, and further that the pleadings did not allege a public nuisance calling for injunctive relief. A decree of the trial court granting the relief sought by plaintiff was accordingly reversed and. the bill of complaint dismissed. In the case at bar, however, the statute pursuant to which plaintiff’s ordinance was adopted specifically declared in section 8 thereof, that:
“Buildings erected, altered, razed or converted, or uses carried on in violation of any provision of township ordinances or regulations made under the authority of this act are hereby declared to be a nuisance per se. The court shall order such nuisance abated and the owner and/or agent in charge of such building or land shall be adjudged guilty of maintaining a nuisance per se. ’ ’
It thus appears that under the specific terms of the statute the use made by defendants of the premises in question, and the buildings erected, in violation of the terms of the ordinance, constitute a nuisance per se. -Such result was recognized by this Court in People v. Kelly, 295 Mich. 632. An analogous provision of the prohibitory liquor law of Kansas was before the Supreme Court of the United States in Mugler v. Kansas, 123 U. S. 623 (8 Sup. Ct. 273, 31 L. Ed. 205). In discussing the effect of such provision, which in terms declared all places where intoxicating liquors were manufactured, sold, bartered or given away in violation of the provisions of the statute to be common nuisances, the court said (pp. 673, 674):
“The statute leaves the court at liberty to give effect to the principle that an injunction will not be granted to restrain a nuisance, except upon clear and satisfactory evidence that one exists. Here the fact to be ascertained was, not whether a place, kept and maintained for purposes forbidden by the statute, was, per se, a nuisance — that fact being conclusively determined by the statute itself — but whether the place in question was so kept and maintained.
“If the proof upon that point is not -full or sufficient, the court can refuse an injunction, or postpone action until the State first obtains the verdict of a jury in her favor. In this case, it cannot be denied that the defendants kept and maintained a place that is within the statutory definition of a common nuisance. ’ ’
See, also, Denapolis v. United States (C. C. A.), 3 Fed. (2d) 722; Pompano Horse Club, Inc., v. State, ex rel. Bryan, 93 Fla. 415 (111 South. 801, 52 A. L. R. 51); State, ex rel. Threlkeld, County Attorney, v. Osborne, 207 Iowa, 636 (223 N. W. 363); Forehand, Solicitor General, v. Moody, 200 Ga. 166 (36 S. E. [2d] 321); State, ex rel. Hunter, Attorney General, v. The Araho, 137 Neb. 389 (289 N. W. 545).
It is specifically provided by 3 Comp. Laws 1929, § 13944, as amended by Act No. 41, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 13944, Stat. Ann. 1946 Cum. Supp. § 27.545), that the circuit court in chancery shall have jurisdiction:
“In all matters concerning nuisances and waste, where there is not a plain, adequate and complete remedy at law, and may grant injunctions to stay and prevent such nuisances and waste.”
Plaintiff relies on this provision of the statute, claiming that it, in view of the declaration of the legislature in the enabling act under which the township ordinance was adopted to the effect that uses and structures maintained in violation of such ordinance shall be regarded as nuisances per se, gives to the court of equity complete jurisdiction in the premises. It must be said in this connection that there is no adequate remedy at law for the enforcement of such an ordinance. Citing 2 Story’s Equity, §§ 921, 922, it was said in Mugler v. Kansas, supra, (p. 673):
“The ground of this jurisdiction in cases of purpresture, as well as of public nuisances, is the ability of courts of equity to give a more speedy, effectual, and permanent' remedy, than can be had at law. They can not only prevent nuisances that are threatened, and before irreparable mischief ensues, but arrest or abate those in progress, and, by perpetual injunction, protect the public against them in the future; whereas courts of law can only reach existing nuisances, leaving future acts to be the subject of new prosecutions or proceedings. This is a salutary jurisdiction, especially where a nuisance affects the health, morals, or safety of the community. Though not frequently exercised, the power undoubtedly exists in courts of equity thus to protect the public against injury.”
The jurisdiction of equity to restrain a nuisance was upheld by this Court in Board of Health of the City of Grand Rapids v. Vink, 184 Mich. 688. In that case the plaintiff sought equitable relief to restrain defendant from removing and depositing garbage within the city. The Court pointed out that the averments of fact in the bill of complaint were sufficient on which to predicate a finding that a nuisance was alleged, although the term was not used. The proofs were sufficient to establish such nuisance. It was recognized that usually courts of equity will not interfere to prevent the breach of a penal ordinance, but may properly do so under certain circumstances to prevent the continuance of a nuisance. See, also, Building Commission of the City of Detroit v. Kunin, 181 Mich. 604 (Ann. Cas. 1916 C, 959); Stead v. Fortner, 255 Ill. 468 (99 N. E. 680); City of Stockton v. Frisbie & Latta, 93 Cal. App. 277 (270 Pac. 270); State v. Ellis, 201 Ala. 295 (78 South. 71, L. R. A. 1918 D, 816). Further citations will be found in the annotation in 129 A. L. R. 890 et seq.
Other questions raised by counsel for defendants in their brief, and on the oral argument, do not require discussion. They have been given consideration and found to be without substantial merit. For the reasons above indicated the decree of the trial court is affirmed, with costs to plaintiff.
Btjtzeli, Bttshnell, Sharpe, Boyles, Reid, Nortjh, and Dethmers, JJ., concurred. | [
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Chandler, J.
C. W. Toles & Company was incorporated under the laws of this State on November 24, 1926, to conduct a general brokerage business in securities, including land contracts and mortgages, to buy, sell, lease and improve real estate, and to act as ag’ents, managers or brokers in connection with the establishment and promulgation of corporations, associations or any other form of business enterprise. The total authorized capital stock of the corporation was 3,000 shares of no par value stock, 1,000 shares thereof to be known and classified as class “ A” stock, and 2,000 shares to be known and classified as class “B” stock. The price of the class “A” stock was fixed by the articles of association at $100 per share, and the price of class “B” at $1 per share. Class “ A ” was a preferred stock and entitled to receive dividends at the rate of $7 per share annually and no more before declaration of dividends on class B stock, and in case of liquidation or dissolution, was entitled to be paid in full out of the assets whether capital or surplus, at the rate of $100 per share together with any unpaid cumulative dividends, if capital and surplus was sufficient.
Article 5 of the articles of association shows that all of the authorized capital stock was subscribed and that the subscription for 500 shares of class A stock was fully paid for in cash in the amount of $50,000. The articles of association, by the filing thereof with the secretary of State and the county clerk of Wayne county, where the office of the corporation was located, became, of course, a matter of public record.
Defendant Charles W. Toles subscribed for 501 shares of class A stock and for 1501 shares of class B stock but did not pay in full therefor at the time of subscription, and in fact never paid his subscription for 480 shares of the class A stock and for 940 shares of class B stock, having been released therefrom by action of the stockholders as will be later discussed. He paid for 1,000 shares of class B stock, not in cash, but by a management contract entered into with the corporation whereby Toles eventually received 501 shares and other stockholders received 499 shares. This distribution was made because it was originally intended by the incorporators that 1,000 shares of the class B stock should not be paid for in cash but should be given to the subscribers as a bonus. They were afterwards advised that the corporation could not issue bonus stock, and Mr. Toles thereupon gave to the original subscribers one share of class B with each share of class A that was paid for, the distribution thus made being out of the 1,000 shares that were issued to Toles as a part of the consideration for the management contract that he made with the corporation. It fairly appears that these shares, in addition to another 60 shares purchased by Toles, was the only class B stock that was ever issued.
Defendants Charles W. Toles, Harold L. Wads-worth, Herbert H. Upton, Prank P. Book, together with others who are not parties to this litigation, were the original incorporators of C. W. Toles & Company. The above named individuals were the first officers and directors, and, with the exception of Mr. Upton, continued as such until the filing of the bill of complaint herein on September 7, 1932. Mr. Upton disposed of his stock in August, 1930, and was succeeded on the board of directors by defendant Norman C. Frealig. Mr. Toles was president and manager of the corporation, and undoubtedly the dominant factor therein.
Shortly after the incorporation of the company, and prior to the commission of any of the acts complained of by plaintiff, defendant Toles acquired by purchase the holdings of one George Sloan, an original incorporator who owned 250' shares of class “A” stock and an equal number of class “B” shares.
The corporation immediately after its organization engaged in the purchase and sale of net equities in land contracts, mortgages and other securities, and seems to have restricted itself to these operations during the period of its existence. The record discloses that the business from its inception up to and including the year 1930 was operated on a very successful and profitable basis.
For the year ending’ December 31, 1927, the net income of the corporation was 22.55 per cent, of its outstanding capital stock and it paid a dividend of 6.64 per cent. For the year ending December 31, 1928, its net income was 58.93 per cent, and it paid in dividends 21.78 per cent. For the six months ending June 30,1929, its net income was 17.88 per cent, and it paid in dividends 13.41 per cent. The balance sheet of June 30, 1929, revealed a strong financial condition and showed an undistributed surplus balance of $33,460.99, or 63.06 per cent, of the outstand ing capital stock. In addition, it had a reserve of $22,500 which had been provided for collection expenses and losses.
The record discloses that a special meeting of the stockholders of the company was held on July 1,1929, at which all shareholders were present, and the minutes of said meeting show unanimous affirmative action on the following resolution:
“Whereas, upon the organization of C. W. Toles & Company, Inc., Mr. C. Wallace Toles subscribed for 501 shares of class A stock in this corporation at a price of $100 per share, and 1501 class B shares of said stock at a price of $1 per share, as appears from the articles of association of said corporation executed upon November 18, 1926; and
“Whereas, since the organization of said corporation said C. Wallace Toles paid in the price of 561 of class B shares subscribed for by him, as appears from the books and records of this corporation, but has never paid in the price of the balance of the 940 class B shares in said stock subscribed for by him, as aforesaid; and
“Whereas, upon the organization of this corporation said C. Wallace Toles paid in the price of 21 of said class A shares, as appears from the books and records of this corporation, but has never paid in the price of the balance of class A shares subscribed for by him as aforesaid, or any part thereof; and
“Whereas, it was determined by resolution duly adopted at the annual meeting of the board of directors of this corporation held January 10, 1928 that said C. Wallace Toles should have the right and option to make payment for the balance of his said subscription to class A and class B shares of stock in this corporation at any time within one year from the date of said meeting*, as appears from the records and minutes of said meeting; and
“Whereas, said C. Wallace Toles has never accepted nor received any dividends upon said unpaid shares in the stock of this corporation subscribed for by him, or accepted or derived any other benefits therefrom or exercised the option therein mentioned granted to him by the board of directors of said corporation at the annual meeting held January 10,1928, to pay for said shares within one year from said date; and
“Whereas, said C. Wallace Toles has stated to the stockholders at this meeting convened that he feels it would now be unfair for him to purchase or accept said unpaid shares in the class A and class B stock of this corporation at the price at which he subscribed for the same because of the great increase in value of said shares since the organization of this corporation, and from other motives of fairness and generosity, has elected to release his rights to said shares and to resell the same to the corporation at the price at which he subscribed for the same, such price to be paid solely through the release of the said C. Wallace Toles from any and all liability upon account of his subscription for said shares; and
“Whereas, it is manifestly beneficial to this corporation to accept said offer made by said C. Wallace Toles; and
“Whereas, as appears from the books and records and the financial statement of this corporation, the gross assets thereof as of the date of this meeting amount to not less than $131,344.29 and the aggregate amount of any and all liabilities of the corporation as of the date hereof (including all issued or subscribed capital stock) do not exceed the sum of $97,324.14, and the net assets or surplus of the corporation as of the date of this meeting’ are not less than the sum of $34,020.15; and
“Whereas, it appears that the surplus or net assets of the corporation are now in excess of the amount required to accept said offer hereinabove mentioned made by said C. Wallace Toles and repurchase at the original subscription price thereof said unpaid class A and class B shares in the stock of this corporation subscribed for by said C. Wallace Toles, as hereinabove stated ;
“Now therefore, be it
“Resolved, that C. W. Toles & Company, Inc., does hereby accept the offer of said C. Wallace Toles to sell, assign and transfer to it all his right, title and interest in and to said 480 shares in the class A stock and 940 shares in the class B stock of this corporation subscribed for by him upon the organization thereof but never paid in by him, together with any and all dividends which may have heretofore been declared to be paid or become payable upon said shares, at the original subscription price of said shares, and that payment for the repurchase of said shares by the corporation from said C. Wallace Toles at the price or prices aforesaid be made from the net assets or surplus of this corporation, and that payment for said shares at such prices be made by and through the release of said C. Wallace Toles of and from any and all liability on account of his subscription for said shares; and be it further
“Resolved, that this corporation, by and through its proper corporate officers, shall execute and enter into an agreement with said C. Wallace Toles in such form' as the board of directors' of this corporation may in their discretion approve or authorize to be executed by said officers on its behalf, providing among other thing’s, for such release of said C. Wallace Toles from any and all liability on account of his subscription to said shares; and be it further
“Resolved, that said shares in the capital stock of this corporation purchased or repurchased by it from said C. Wallace Toles in pursuance of this resolution, shall.not be cancelled or retired but shall be held in the treasury of the company as treasury stock until the further order of the board of directors; and be it further
“Resolved, that the board of directors of this corporation be and they hereby are authorized and empowered to take any and all such action as they may deem best for the purpose of carrying’ out this resolution and the purposes thereof. ’ ’
A special meeting of the board of directors followed the stockholders’ meeting at which all directors were present, and unanimous affirmative action was taken which rendered effective the resolution of the stockholders, and in consideration of which C. W. Toles executed the following release:
“For and in consideration of the release of the undersigned C. Wallace Toles from and of any and all liability upon account of the subscription by him of 480 shares in the class A stock of C. W. Toles & Company, Inc., and 940 shares in the class B stock of said corporation, the undersigned C. Wallace Toles does hereby sell, assign and transfer unto C. W. Toles & Company, Inc., said shares in the capital stock of said corporation. ’ ’
The balance sheet of the company as of December 31,1929, shows current assets of $134,123.99 and current liabilities of $18,767.83, a reserve for expenses of $21,500.50 and a surplus balance of $39,605.33.
On August 30, 1930, at a special meeting’ of the board of directors, defendant Upton, who was vice-president and active in the affairs of the company, tendered his resignation as a member of the board for the announced reason that he had formed a company of his own, and his resignation was by resolution accepted to take effect' immediately. Defendant Frealig was then elected a director and vice-president to take Mr. Upton’s place. The minutes of this meeting show that after the selection of Mr. Frealig’ as a director, the following* resolution was adopted:
“Resolved: That a dividend of $25 per share upon the class B stock, payable to holders of record of said stock as of October 10,1930, and that the officers of the corporation be and are hereby directed to pay the same as of such date. ’ ’
The minutes of this meeting* also show that,
“The secretary advised the meeting that Mr. Herbert H. Upton, whose resignation as a director and vice-president of the company had been tendered and accepted at this meeting, was willing to sell 49 shares in the class A stock of the company to the company at a price of $100 per share. The secretary stated that such price was the actual value of the stock and that such offer was made by Mr. Upton because he felt that it was not fitting* that he should retain such stock after severing his relations with the company and that it was proper that he offer to resell the stock to the company at the price at which it was paid in;
“The treasurer stated that the financial statement of the company disclosed that a surplus, as of the date of this meeting, of not less than $30,000 or more than sufficient to enable the company to purchase said stock from surplus.
“Upon motion duly made, seconded and carried, it was unanimously
“Resolved, that this company repurchase from Herbert H. Upton said 49 shares of its class A no par value stock at a price of $100 per share or a total price of $4,900 and that the officers of the company be and they hereby are authorized to pay said amount to said Herbert H. Upton from the funds of this corporation upon receiving the certificate evidencing said 49 shares of class A stock duly indorsed, and
“Resolved, further, that such shares of stock so repurchased by this company shall not be cancelled or retired but shall be held in the treasury of the company as treasury stock until the further order of the board of directors.”
Mr. Upton claims that at the time he sold his stock he supposed he was selling the same to C. W. Toles; that he received $100 per share for his class A stock and that he sold 149 shares of class B stock to C. W. Toles for which he received the sum of $32 per share. He testified:
“My stock * * * in the C. W. Toles & Company at the timé I left I sold to C. W. Toles. He wanted a proposition where either I would buy him out or he would buy me out. I made a proposition to buy him out which he accepted to buy me out on. I gave a figure at which I would either* buy or sell. The figure was par for the preferred stock — the A stock— and $32 per share for the B stock. ’ ’
The balance sheet of the corporation as of August 31,1930, shows current assets of $128,806.41, current liabilities of $16,710.25, a reserve for deferred expenses of $20,889.29 and a surplus balance of $37,542.
The balance sheet of October 31, 1930, being subsequent to the payment of the dividend authorized, at the meeting of the board held August 30th, shows current assets of $85,771.21, current liabilities of $6,886.48, reserve for deferred expenses of $20,445.20 and a surplus balance of $9,808.63.-
The balance sheet of March 31,1931, shows current assets of $81,909.59, current liabilities of $11,202.66, reserve for deferred expenses of $18,816.47 and a surplus balance of $4,141.72.
At a meeting of the board of directors held on Ap^il 6, 1931, at which all directors were present, the following resolution was unanimously adopted.
“Resolved: That a dividend of $15 per share upon the class B stock payable to the holders of record of said stock as of April 6,1931, and that the officers of the corporation be and are hereby directed to pay the same as of such date. ’ ’
The balance sheet of April 30,1931, shows current assets of $80,528.89, current liabilities of $12,820.95, reserve for deferred expenses of $18,822.62 and a surplus balance of $1,519.23.
The balance sheet of May 31, 1931, after payment of the dividend declared April 6th, shows current assets of $72,907.72, current liabilities of $22,231.33, reserve for deferred expenses of $1,952.02 and a surplus balance of $608.28.
The significance of the foregoing data will become apparent in the further statement of facts and the discussion of the questions involved in this appeal.
In December, 1928, plaintiff desired to make some investments in land contracts on Detroit real estate, and discussed with Mr. C. W. Toles, president and manager of C. W. Toles & Company, the proposition of purchasing contracts from this corporation. After some discussion, plaintiff made a written proposition to purchase contracts of the company, providing there should accompany each contract a certain written guaranty. This proposition proved acceptable and on December 18, 1928, plaintiff purchased 18 contracts for the sum of $48,000. The agreement prepared by plaintiff was as follows:
“In consideration of the purchase price of any and all land contracts sold to you on or after this date, we agree to furnish the following services to the best of our ability:
“Without further charge except as hereinafter stated, we will collect all payments and either remit them to you or credit them to your account, as per your instructions; supervise insurance on- the properties by seeing that the proper amount is carried and that the policies are kept in force. We will attend to principal and interest payments on your mortgages and refinance them when necessary or advisable at the lowest terms of cost that we can obtain. You will get all benefits derived from such refinancing and your account will be charged with the expense to us, if any.
“All properties covered by contracts sold to you will be appraised by either George Yan Burén or myself, or both of us.
“Before we purchase any land contracts which are sold to your account, we will (1) carefully investigate the vendee, (2) get a legal opinion from an attorney, one who meets with your approval, showing marketable title to the property, (3) furnish a certificate of survey, (4) investigate to see that all bills for material and labor have been paid when the contract covers a new house, (5) get an acceptance of the property from the vendee, (6) investigate the status of the first mortgage and check special and general taxes, (7) have the legality of the transaction passed upon by our attorney.
“After your contracts are paid for, we will deliver to you all papers necessary for the passing of title and especially, warranty deeds, original contract, contract assignments, certificate of survey and legal opinion showing marketable title.
“You will be furnished with a statement of your account monthly. On payments received during the month you will be credited for the balance of the month at four per cent. We will charge you at the rate of six per cent, on the moneys loaned your account by this company.
“This arrangement can be terminated by you upon 10 days ’ written notice, providing all sums due us are paid. In such case we would turn over to you all papers and records of your account, but we would not be obligated to perform further service in connection with said account.
“With each land contract delivered to you, we will give you a written guaranty reading as follows:
“In consideration of the purchase price of-paid to us by you for land contract covering- property at-, we agree, that in the event of the default in the payment of any instalment of principal, interest or taxes falling due under this land contract, and if such default should continue for a period of 90 days, we will take back the defaulted contract and assign and deliver to you a substituted land contract in good standing and which never has been in default ; the said substituted land contract shall, or as near as possible, have a balance due as is due on the original land contract and which balance shall be payable upon substantially the same terms as the original land contract and the substituted land contract shall be delivered to you at such a price, that the return to you from the same, taken together with the return already received from the original land contract, shall net you the same return that you would have received had no default occurred in the original land contract — or we will at our option, refund to you your original investment, less all payments received by you on such contract, together with six per cent, interest on balance from date of default. In case of replacement, any difference between the price of the substituted land contract and the balance unpaid on the contract and to which you are entitled upon surrendering the original land contract, shall be adjusted by cash payment made either by ourselves or by you, as the case may be.
“It is expressly understood that the above guaranty shall remain in force only so long as you are willing to permit the above mentioned land contract or substituted contract to be serviced by us and collections made by us, which will be done without fur tber charge to you. The substituted laud contract to carry with it this same guaranty.”
The written guaranty provided for in the foregoing document was attached to each contract purchased by plaintiff. On the date of the purchase, plaintiff paid to defendant corporation the sum of $30,000. He made subsequent payments during the year following, bringing the total payments on the first purchase to $46,000, and in March, 1931, paid an additional $2,000. He had, however, prior to March, 1931, purchased other contracts of the corporation on credit, securing the payment thereof and of the balance due on the original purchase, by deposit of certain contracts with defendant corporation as collateral.
The defendant corporation claimed that it did not make a practice of giving any guaranty with contracts sold to its customers, although it was its practice to repurchase or replace defaulted contracts with contracts not in default, and that this custom had proved profitable.
It was claimed by plaintiff that Toles & Company had sold to one Herbert Lamb land contracts of the approximate value of $179,000 on which a guaranty similar to that given plaintiff had been made. There is nothing in the record to substantiate this claim. The record does show that there was a dispute between Mr. Lamb and the company, and that the latter, in May or June, 1931, repurchased land contracts of Lamb of the face value of approximately $150,000 for the sum of $100,000, giving a note in payment thereof. We are convinced that these land contracts carried no guaranty of replacement or repurchase. The record discloses but three or four instances wherein guaranties had been given to others than plaintiff, bnt they were small in amount and are of minor importance in this discussion.
The net profits of the company from the time of its incorporation to the end of the year 1931 were $89,605.81, and the amount paid out in dividends during that period totaled $82,137.83.
We have called attention to the item of reserve for deferred expenses as shown by the balance sheet. This reserve was created because the corporation had been advised by its auditors to set up the same with the expectation that additional income tax deductions might be obtained in that way, and the income tax lowered. Later, the internal revenue department, having made a ruling which prohibited such a deduction being taken, and the reserve having been created out of the earnings on the basis of the number of contracts sold, and the corporation never having been called upon to use any part of this reserve for expenses, collections of losses, it was treated and considered as a part of the surplus account of the corporation. Certified public accountants testified that it was proper to transfer all or any part of said reserve to the surplus account at any time the company chose tó do so. As witnesses for the corporation, they also testified that up to March 31, 1931, the company had reacquired from contract purchasers a total of 32 contracts and had disposed of the same prior to the date mentioned, resulting in a net profit to the corporation of $3,059.12, and that other contracts had been acquired and sold between August 30,1930 and March 31,1931 at a net profit of $303.65.
At the time of the release of defendant Toles from his subscription to the capital stock, none of plaintiff’s contracts were in default. At the time of pay ment of the August, 1930, dividend there were but five of plaintiff’s contracts in default, on one of which the court in 1937 assessed his damages at $500, one at $650, one at $750, one at $900 and one at $1,350, or a total of $4,150'. At the time of the payment of the April, 1931, dividend, four additional contracts had gone into default, on one of which the court assessed damages at $825, one at $950, one at $3,150 and one at $2,300, or a total of $7,225. The remainder of plaintiff’s contracts defaulted at various dates thereafter between August, 1931, and November, 1932, on the whole of which his damages were assessed at the sum of $36,486.10, said assessment being made as of 90 days after the date of the breach of each guaranty, and interest was allowed at the rate of five per cent, per annum from 90 days after the date of such breach to January 1, 1937.
The court also found that the defendant corporation had appropriated income it had received from collections on pLaintiff’s contracts between March 1, 1933, and January 1, 1937, in the sum of $11,028.71, and allowed plaintiff this amount with interest at the rate of five per cent, per annum from March 1, 1933, to January 1,1937. Also allowed as an element of damages, was an item of interest charged to plaintiff by the corporation in the sum of $1,110.11 between March 1,1933, and January 1,1937.
On the date of the release of defendant Toles from his subscription, the corporation had a surplus of $33,460.99, and a reserve for collection expenses and losses amounting to $22,150, which reserve was after-wards transferred to the surplus account, making a total surplus of $55',610.99, the same being in excess of the total amount of plaintiff’s investment in land contracts of the corporation at that time.
During a considerable period preceding May 14, 1931, plaintiff and defendant Toles as a representative of the corporation, had numerous conferences relating to the contracts that were in default, and on this date the following agreement was made between plaintiff and the corporation:
"C. W. T. Co. to take back and replace one or more land contracts each month commencing’ May (1931) —contracts six months or more delinquent to be replaced first — New contract to comply with terms of written agreement between C. W. T. & Co. and T. P. M. covering replaced land contracts — $100 debit chgd. against T. P. M. to be credited at once if it has not already been credited.”
Tn pursuance of this agreement, the corporation substituted two nondefaulted contracts for contracts that were in default, but later declined to make any more substitutions, and on September 7, 1932, plaintiff made the following demand upon the corporation:
“Until the matters in dispute between us are settled or- adjusted, it is my wish that the collections on my land contracts be made by Upton-Biggs & Company. This action on my part is made necessary by your repudiation of your contract obligations to me.
“You are hereby notified to turn over all papers, records and accounts in your possession referring to my land contracts to Upton-Biggs & Company, as well as any funds on hand belonging to me upon demand by Upton-Biggs & Company. ’ ’
Pursuant to this demand, certain of said contracts were delivered to plaintiff and others were retained by the corporation, it claiming a lien upon them for an alleged indebtedness from plaintiff to it. On this same date, September 7th, plaintiff instituted this suit, and the hearing thereof was commenced June 21, 1933.
The defendant corporation assigns as its reason for refusing to substitute contracts as per its agreement that the plaintiff was indebted to it during the period covering the transactions for the balance of the purchase price of said contracts, and the record discloses that on May 1,1931, he was indebted to the company in the sum of $9,262.51, and as of May 1, 1932, owed $3,237.53.
The company contends that plaintiff’s action, in taking contracts from its possession after its breach of the agreement, constituted a breach of contract on the part of plaintiff and that because thereof recovery is barred. We are not in accord with this contention, but find that after default by the corporation, plaintiff had a right to demand and receive the contracts without waiving any of his rights.
The plaintiff brought this suit by bill in equity against the defendant C. W. Toles & Company for an accounting for moneys collected by it, and also for an accounting for damages occásioned by breach of the contract of guaranty; against Charles W. Toles to subject him to liability on his unpaid subscription for stock in the corporation, for the illegal authorization and payment of dividends as a director of the corporation and for illegal authorization and receipt of exorbitant salaries; against defendants Harold L. Wadsworth, Herbert H. Upton, Frank P. Book and Norman C. Frealig as directors for illegal authorization and payment of dividends as directors of the corporation, and for the alleged illegal refunding of the Upton preferred stock; and against Grace S. Toles and the Toles Management Company for alleged conveyances and transfers of property to them by the corporation in fraud of the rights of plaintiff as a creditor. The defendants filed answers denying the material allegations in plaintiff’s bill, and the case was submitted upon the pleadings, testimony taken before a commissioner of the court, the report of the commissioner and upon proposed findings of fact and conclusions of law filed by all of the parties. The trial court entered a decree in favor of plaintiff and against the defendant corporation for $48,624.92, being a sum found due him on an accounting and as damages for the breach of the guaranty contract. The court also decreed that the release of Charles W. Toles from his subscription for stock in the corporate defendant was unlawful, and that he should pay the corporation the sum of $48,940 within 30 days from the date of the decree, together with interest thereon at the rate of five per cent, from January 1, 1929, which sum was to be subjected to the payment of plaintiff’s claim, and that plaintiff’s bill of complaint as to the other defendants should be dismissed.
From this decree plaintiff appeals, and the corporate defendant and Charles W. Toles have filed cross-appeals.
Plaintiff insists that the court erred in not holding defendant Charles W. Toles liable for assets withdrawn through illegal dividends and exorbitant salaries. There is nothing to indicate that the corporate defendant paid or that defendant Toles received an exorbitant salary. This action was not brought against defendants as stockholders to recover dividends illegally paid to them. The statute, 2 Comp. Laws 1929, § 10018, since repealed, creates the liability, and 3 Comp. Laws 1929, §§ 14480-14492 (Stat. Ann. §§27.1380-27.1392) provides the proceedings for the enforcement of the individual liability of stockholders. The provisions of the statute were not followed here.
Plaintiff claims error for failure of tbe court to hold the defendants Book and Wadsworth liable for payment of illegal dividends and negligent management. There is no liability in this proceeding for receipt of dividends, and the liability of these defendants and others, as directors, for negligent management will be discussed later.
Plaintiff also insists that the court was in error in not holding defendants Grace S. Toles, the Toles Management Company and Mr. Upton liable because they received corporate assets. We find no instance in the record showing that Grace S. Toles or the Toles Management Company received any of the corporate assets without adequate consideration, nor were there any dealings between them and the corporation that were prejudicial to plaintiff. The dealings of the corporation with defendant Upton will be later discussed.
Plaintiff further complains of the ruling of the court requiring the payment of the tax imposed by 1 Comp. Laws 1929, § 3641 (Stat. Ann. §7.422), on the land contracts, being exhibits 2 to 22, inclusive, which were offered in evidence by plaintiff and asks for a declaration by this court that such contracts were not subject to such tax. The record shows that the tax was paid by plaintiff under protest to the county treasurer. The county treasurer is not a party to this proceeding, and we, therefore, decline to express any views on the question.
Defendant C. W. Toles & Company insists that the lower court was in error in the method of computing damages for breach of its contract of guaranty with plaintiff, and takes the position that where an obligor has the option of performing a contract in one of two ways, the obligee is entitled to damages only in accordance with the alternative that will result in the smaller recovery, and that in this instance the correct measure of damages, if any, was the difference in value between a nondefaulted contract and a defaulted one of approximately the same amount, terms and conditions. This would be true were it not for the agreement made by the corporation that each substituted contract should carry with it the same guaranty of substitution as the original contract, and we must hold that this agreement was in effect a guaranty by the corporation that plaintiff’s contracts would eventually be paid. The rule contended for by the corporate defendant that where an obligor has the option of performing in one of two ways that’ the obligee is entitled to damages only in accordance with the alternative that will result in the smallest recovery is not questioned. Here, the obligor had the option of repurchasing the contract for the amount of the original investment, less payments received, or to substitute a nondefaulted contract which carried with it a similar guaranty, and plaintiff is only entitled to recover in accordance with that obligation that would result in the smallest recovery. However, we are unable to determine, and we believe the trial court was confronted with the same difficulty, which alternative would result in the smallest recovery. We think the burden is upon the corporate defendant to furnish this information to the court. This it failed to do, but contented itself by insisting that the trial court’s method of arriving at plaintiff’s damages was absolutely wrong.
Defendant and cross-appellant, C. W. Toles, insists that the plaintiff, not being a creditor of the corporation at the time of the cancellation of his unpaid stock subscription, cannot now complain of such action. He also takes the position that the plaintiff, in view of the fact that before he made his initial investment with the corporate defendant, investigated the company and found that $50,000 of the stock subscribed for by Charles W. Toles had not been paid for, is estopped from holding such stockholder for unpaid subscription balances. Defendant Toles, also claims, that at the time of the cancellation of his stock subscription, the corporation had more than a sufficient surplus on hand to have enabled it to have repurchased the stock defendant had subscribed at the subscription price, and that in view of the sound financial standing of the corporation at the time of such release, the action was not in fraud of the rights of any creditor. He also argues that at that time there were no creditors of the corporation in any substantial amount.
The first question to be discussed is the liability, if any, of the defendant corporation to plaintiff for breach of its contract to repurchase or substitute nondefaulted contracts for defaulted ones, and the correctness of the trial court’s method of measuring damages.
There is nothing about the contract that is ambiguous. It is clear that the corporation bound itself to take back from plaintiff land contracts that were 90 days in default and substitute therefor contracts that had never been in default, and which were to be, as near as possible, equal in amount, conditions and terms to the defaulted one, or it would refund, at its option, plaintiff’s original investment, less payments received by him. The substituted land contracts were to carry this same guaranty. The corporation was in a much better position to determine which alternative would be most advantageous to it. The burden was upon it so to show, and it failed to meet this burden. It also failed to attack the credibility of the testimony upon which plaintiff relied to establish his damages. We hold that the court was correct in his method of measuring the damages and affirm the award decreed by him.
The contention of C. W. Toles & Company that plaintiff had an adequate remedy at law and that equity had no jurisdiction is without merit. Plaintiff sought an accounting and other relief. No motion to dismiss was made. The case was heard and submitted upon the merits. The court had jurisdiction of the parties and the subject-matter.
The next question to be considered is the correctness of the court’s decree holding defendant and cross-appellant, Charles W. Toles, liable on his original subscription for stock in C. W. Toles & Company. The plaintiff insists that the action of the corporation, by the resolutions hereinbefore referred to, was in effect a release without consideration of Toles from his obligation to pay his stock subscription. Toles contends that this action was a repurchase of the stock by the corporation at a time when it had ample surplus with which to make the purchase and complete the transaction. We fail to see where the cancellation of a subscription differs from a purchase by the corporation of shares of its own stock. It can do neither to the prejudice of the rights of creditors. The resolutions adopted by the shareholders and the board of directors relative to this transaction makes it clearly apparent that all of the parties intended and treated the transaction as a purchase from Toles of his stock by the corporation. We have held that a corporation may lawfully repurchase its own stock, providing the purchase is made from surplus. Barden v. A. Heller Sawdust Co., 240 Mich. 549, and cases cited therein. See, also, 6 Fletcher on Corporations (Perm. Ed.), pp. 75A-759; Rasmussen v. Schweizer, 194 Wis. 362 (216 N. W. 481). At this time, C. W. Toles & Company had a surplus, including reserve for collection expenses and losses, which we hold was properly treated as surplus, of upwards of $55,000. This amount was available for whatever purpose the corporation saw fit to use it without impairing its capital structure and without prejudice to the rights of creditors. It could have paid it out to stockholders in the form of dividends or could have used it to purchase its own stock. Its solvency at this time is not questioned, and nothing in this transaction either rendered or tended to render it insolvent. None of plaintiff’s contracts were in default. The corporation’s current assets were more than four times its current liabilities. Its business was operated on a very successful and profitable basis, and the stock which Toles sold to it was worth more than par, based on earnings and assets. The record discloses that the repurchase was in all respects fair, was not prejudicial to the rights of plaintiff, and was in reality advantageous to the corporation. We therefore hold that the finding of the trial court that defendant Toles is liable to the C. W. Toles & Company to the amount of the unpaid subscription on his stock must be reversed.
The next question presents the liability of defendant Upton on the alleged refunding of his preferred stock in the corporation by action of the board of directors under date of August 30, 1930. Upton desired to enter business for himself and was willing to sell his preferred stock to the corporation or to Toles at par and his common stock for $32 per share, or, in the alternative, he would purchase the Toles stock at this price thus giving him control of the company. The corporation, by action of its board, purchased his preferred stock at $100 per share and C. W. Toles purchased his common stock at $32. This is quite conclusive evidence of the value that Toles and Upton who were most familiar with the affairs of the corporation, placed upon the assets and business of the company. The balance sheet at this date showed current assets of more than seven times the current liabilities. There was a surplus of about $60,000. Four of plaintiff’s contracts were in default on which the court three or four years later assessed damages at $2,800. We must hold that the transaction between the corporation and Upton did not constitute a refunding of the Upton stock, but was a purchase by the company of such stock, and that both parties to the transaction were within their legal rights.
We are now concerned with the question of the liability of defendants Toles, Upton, Wadsworth, Book and Frealig as directors for the declaration and payment of dividends of $25 per share on the common stock as of August 30, 1930, and $15 per share as of April 6, 1931. The following questions are presented: Was the corporation insolvent when the dividends were declared and paid? Did the declaration and payment of the dividends render the company insolvent? Did the directors at the time of the declaration and payment of such dividends know that the corporation was insolvent, or that such action would render it insolvent? If these questions can be answered in the affirmative, the defendants mentioned must be held liable under the provisions of 2 Comp. Laws 1929, § 10019 (since repealed). If answered in the negative, there is no liability.
In the preceding paragraph we have discussed the financial condition of the company as of August 30th, the time of the purchase of the Upton stock and the declaration of the $25 per share dividend. At the time of the declaration of the dividend on April 6, 1931, the current assets of the corporation were more than seven times the ámount of the current liabilities, and the company had a surplus of $22,958. At this time, plaintiff had a total of eight contracts in default on which the court subsequently awarded him damages in the total amount of $10,025. After the payment of the April dividend, as shown by the balance sheet, it had assets in excess of its liabilities, other than its liability to plaintiff in excess of the sum of $50,000. The court found that the company was indebted to plaintiff for breach of guaranty contracts in the sum of $36,486.10. Treating this whole sum as a liability on the part of the corporation, it was not insolvent at the time of the payment of the dividends and the payment thereof did not render the company insolvent. The other items which make up the amount awarded plaintiff against the company consist of income appropriated by it from collections on plaintiff’s contracts between March 1, 1933 and January 1, 1937, and for interest charged by the company against plaintiff during this period.
Plaintiff attacked the correctness of the balance sheets of the defendant corporation, insisting that the item of land contracts was carried on the books for an amount much in excess of the value of the contracts as of the date of the balance sheets. An expert witness for plaintiff, Mr. Hahn, testified relative to the value of the contracts and if the court were to adopt his estimate of the difference between the actual value thereof and the price at which they were carried on the books of the corporation as correct, it would show that the company was insolvent at the time of the payments of the dividends of August, 1930 and April, 1931. Twenty-four of the con-. tracts so appraised by Mr. Hahn were sold by the corporation at various dates between 1929 and 1932, and in each instance the price received was far in excess of the value placed upon them by Hahn. We find in one instance an appraisal made by Hahn of $1,000 as of 1930, the contract being later sold in the same year for $3,044. Another contract that was appraised in 1931 for $1,000 by Hahn was sold during that year for $2,018. Another that was appraised by him in 1931 at $400 was sold in that year for $1,290. One that he appraised in 1930 at $1,000 was later sold in 1930 for $1,914. He appraised a contract in 1931 at $500 which was sold in the same year for $1,533. One appraised in 1931 at $600 was sold in the same year for $2,031. One that he appraised in 1931 for $500 was later sold in that year for $1,653. A contract appraised by him in 1930 at $1,000 was sold in 1931 for $1,914. One appraised by him as of 1929 for $1,576 was sold in 1930 for $2,851. One that he appraised in 1930 for $1,220 was sold in. that year for $2,713. He appraised one in 1929 at $1,554 which sold in 1931 for $2,004. We will not continue with these items other than to state that the properties so appraised by Hahn were sold for more than twice the value placed thereon by him, and in excess of the amount that they were carried on the books of the corporation.' We must therefore hold that no successful attack has been made upon the balance sheets and that the same must be accepted. These contracts were carried on the books of the company at cost or below, which method met with the approval of certified public accountants produced as witnesses by the company, and which they testified was an approved and conservative method of carrying such items.
It may seem inconsistent to accept the values placed by Mr. Hahn on plaintiff’s contracts which were the basis of the award of damages and reject his estimates of the value of land contracts in connection with the attack upon the balance sheets, but when we examine the record we find that defendant gave no testimony whatever relative to the value of the contracts sold plaintiff, but contented itself with insisting that the trial court’s method of arriving at the measure of damages was wrong.
The appraisals made by this witness of plaintiff’s contracts and the contracts carried on the books of the company as assets were actually made about 60 days prior to October 31,1933, the date his testimony was given, but he claims to have appraised plaintiff’s contracts as of a date 90 days after default, and the company’s assets as of various dates during the years 1929, 1930 and 1931. We are inclined to believe that the estimates of values made by this witness were influenced to a considerable extent by the years of depression occurring prior to the time his testimony was given, during which period values sank to a very low level and in many cases, such as stocks, bonds and land contracts, were entirely destroyed.
The business of C. W. Toles & Company did not appear to be materially affected by business conditions in 1929 and 1930. In July, 1930, the company discontinued selling contracts on credit, and this naturally resulted in loss of business and required less capital. In the latter part of the year 1931, it became evident that the land contract business was being seriously affected. This condition became worse and continued so until June, 1933, when a petition was filed for dissolution of the corporation and the appointment of a temporary receiver. The petition which was filed by the board of directors set forth that the stock, property, and effects of the corporation had been so far reduced by losses that the corporation would not be able to pay all just dermands, and that it was deemed beneficial to all concerned that the corporation should be dissolved. The petition showed assets consisting largely of real estate and land contracts in the amount of $124,-608.61, and showed debts as follows: H. W. Lamb, notes payable, $84,105.64; a Mr. Tobias, $1,900; C. W. Toles for salary due and interest in the sum of $8,344.12, and set forth that T. P. Myers was claiming an amount due him of approximately $38,000 and that a suit was pending disputing his claim. This petition was filed about 26 months after the last payment of dividends by the corporation, and after it had incurred the Lamb liability on the purchase of approximately $150,000 worth of contracts.
It is a matter of common knowledge that assets, consisting of securities of the kind dealt in by the corporation, had greatly depreciated in value between 1931 and 1933. We do not believe the court would have been justified in finding that the officers of the corporation should have anticipated this great depreciation in its assets. To paraphrase the language of Mr. Justice Butzel in Chamberlin v. Wagar, 272 Mich. 594, “On August 30, 1930, and April 6,1931, it was not known that a further recession in values would occur. It was believed by many that prosperity would shortly return, and that conditions would improve instead of becoming much worse. * * * Its business had been prosperous, its failure more than two years later evidently not being foreseen, it cannot be said that the payment of dividends in August, 1930, and April, 1931, would sometime later render this corporation insolvent.” In 1931, the popular opinion still was that prosperity would shortly return, and that conditions would improve instead of becoming worse, but it now appears that this opinion was radically wrong. The actions of the officers of the corporation should be viewed from the then present appearances and not at a much later time when we are aware of subsequent events.
The decree is affirmed, except as to the liability of Charles W. Toles, and as to him it is reversed. Plaintiff may have costs against C. W. Toles & Company, defendant Charles W. Toles and the remaining defendants and appellees will recover costs against plaintiff.
Bushnell, Sharpe, Potter, North, and McAllister, JJ., concurred with Chandler, J. Butzel, C. J., and Wiest, J., concurred in the result. | [
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Chandler, J.
Plaintiff, as receiver of Phillip State Bank & Trust Company, obtained a judgment in the appellate court of Illinois on May 6, 1935', against Frank J. Durhan and J ohn H. Taft, the latter being one of the defendants herein, for the sum of $23,000.70, and costs to be taxed in the amount of $284.95. An execution was issued which was returned nulla bona. Later, suit was brought on said judgment in the circuit court for the county of Berrien and plaintiff, on January 21, 1936, obtained a judgment against John H. Taft for $24,141.96, and costs taxed in the sum of $40.40.
On July 25, 1935, one of the defendants herein, J ohn Ailes Taft, recorded with the register of deeds of Berrien county a deed dated June 8, 1935, from John H. Taft and Eva Taft, his wife, to John Ailes Taft, purporting' to convey a certain farm located in Berrien county, the grantee in said deed being the son of John H. Taft.
On January 29, 1936, the judgment remaining' in full force and effect and being wholly unsatisfied, the plaintiff, in order to obtain satisfaction, caused a writ of fieri facias to be issued out of the circuit court for the county of Berrien for the amount of the judgment aforesaid, and the sheriff by virtue thereof levied upon the lands described in the deed above mentioned. On February 21,1936, plaintiff filed the bill in aid of execution herein for the purpose of setting aside the conveyance and to have the premises subjected to levy under the execution, the proceedings being instituted under the provisions of 3 Comp. Laws 1929, § 14617 (Stat. Ann. § 27.1581). Defendant John H. Taft entered no appearance, and neither he nor his wife gave any testimony herein. Plaintiff established a prima facie case by proof of the judgment, the execution and levy indorsed thereon and the conveyance of which complaint is made.
The questions presented are:
(1) Was the defendant John H. Taft insolvent at the time of the alleged conveyance of the property, or did the transfer thereof render said defendant insolvent?
(2) Did the appellant meet the burden of proof imposed upon him by 3 Comp. Laws 1929, § 14617 (Stat. Ann. § 27.1581), by producing creditable evidence showing that the transaction in question was in all respects bona fide?
The defendant, John Ailes Taft, contends that the record shows solvency of his father on the date of the conveyance. On this question he testified substantially as follows: “I would not consider bi-m (John H. Taft) insolvent.” The defendant called as a witness plaintiff’s Illinois attorney, Charles E. Loy, who testified that he had signed two creditors ’ bills in Illinois directed against John H. Taft in which he swore upon information and belief that he was worth $100,000 or more, said affidavits being-based upon his belief that John H. Taft had concealed all of his assets. Mr. Loy further testified that he had occasion to take out three executions against John H. Taft on the Illinois judgment, and had located one piece of property, the record title to the same being in the name of John H. Taft and that this property was sold for $4,500. The trial court found that the debtor either was not able to pay his debts from his own means, or that his property was in such a situation that his debts could not be collected out of it by legal process, and, therefore, that he was insolvent at the time of the conveyance of the property in question to his son. After a careful review of the record, we are convinced that the transfer of the farm in question rendered said defendant John H. Taft insolvent, and placed all of his property beyond the reach of his creditors, unless the conveyance involved is set aside in a proceeding’ of this nature.
It appears from the record that the defendants h,ad been intimately associated in extensive business transactions from about the year 1921 up to the time of the hearing; that in 1921 defendant John H. Taft was, with his brother, engaged in'the package medicine business under the name of Dr. Pierre Chemical Company; that John Ailes Taft in the same year purchased a 20 per cent, interest in his father’s business for. $11,000, giving his note and paying therefor out of the business over a period of two years. The son testified that in 1928 he had an income of some $30,000 from the business and that his father’s income from the same source was in excess of that amount. The business proved very profitable from 1922 up to and including 1928. In 1930, a corporation was formed and John H. Taft conveyed some of his stock to his wife, although it was not at that time transferred on the books of the company into her name. Later he disposed of his holding’s from time to time until finally the son became the actual owner of practically all of the corporate stock, only five shares of the same being of record in the name of John H. Taft and these in reality belonged to the son. The facts clearly indicate that the corporation was a family affair. Many of the transactions of various kinds between the father, the son, and the mother were carried on the corporation books by means of debits and credits. The son was active in the management of the corporation and was familiar with his father’s other business ventures in all of which he participated. It further appears from the testimony of the son that John H. Taft became" indebted to Eva Taft, his wife, most of which appears to have been incurred by him in collecting dividends and profits which should have been received by his wife. It was also claimed by John Ailes Taft that some time prior to the year 1926 he and his father were engaged in the purchase of receiver’s certificates in an oil venture in which considerable profit was made, and that on February 1, 1926, his father gave him a note in the amount of $4,300 representing his share of the profits; that said note never was paid until October, 1935; and that at the time of the transaction involving the conveyance of the Berrien county property, his father offered to sell him the farm with stock and tools for the sum of $5,500 and take a note as payment therefor. Notwithstanding the fact that he held his father’s note for $4,300 on which no interest had been paid for nearly 10 years, he executed and delivered to his father his promissory note for $5,500. It is claimed by John Ailes Taft that his father, being indebted to his mother in an amount in excess of $5,500, turned this note over to her and was to be credited for that amount; that in October, 1935, he settled with his mother by delivering to her the father’s note for $4,300 which, with interest thereon, was insufficient in the amount of $148 to pay Ms $5,500 note then held by her; and that the $148 deficiency was paid by charging his account with the corporation with the sum of $148 and crediting his mother’s account with a similar amount. On one occasion he testified that his reason for not paying for the farm with his father’s note for $4,300 was because he had forgotten about the same, but later he testified that he was conscious of the existence of the note at that time, but that inasmuch as his father had already drafted the note for $5,500, he signed the same and delivered it in payment for the farm.
John Ailes Taft testified that the partnership records were in his father’s possession, and that the books of the Dr. Pierre Chemical Company pertaining to past family accounts were in the possession of the corporation of which he was manager. It would appear to us that these records have evidential value. If true, they would corroborate the testimony of the defendant. The failure to produce such records, together with the failure of the defendant John H. Taft and his wife to testify, is significant. We feel strongly that the failure on the part of defendant John Ailes Taft to produce the books and records which were available to him, and which he claimed would corroborate his testimony, indicates that their production would not have been beneficial to him.
The trial court who heard the testimony and saw the witnesses stated in his opinion that, “the whole transaction is more suggestive of financial manipulation than it is of bona fides, and I cannot remove from my mind the significant fact that this whole occurrence took place within about 30 days after the appellate court had entered a judgment against defendant John H. Taft for some $23,000.”
The court found that plaintiff had made out a prima faoie case; that the defendant had not met the burden of proof by showing that the transaction in question was bona fide. The testimony of the defendant and his witness, Louis Klass, was vacillating’, contradictory and unsatisfactory. A review of the record convinces us that the conclusion of the trial court is correct. In our judgment, the prima faoie case of plaintiff was not shaken by the testimony of the defense.
Decree affirmed, with costs to plaintiff.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, North, and McAllister, JJ., concurred. | [
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North, J.
Plaintiff, alleging that she sustained damage hy reason of the automobile in which she was a passenger being struck by a train of the defendant railroad company, brought this suit to recover for injuries. There was a trial by jury and plaintiff prevailed. On defendant’s motion judgment non obstante veredicto was entered and plaintiff has appealed. This motion was granted upon the sole ground that under this record plaintiff was shown to be guilty of contributory negligence as a matter of law. This ruling presents the only question for review.
The following statement of facts is in accord with that contained in appellant’s brief or in her testimony. Elmhurst avenue extends in an easterly and westerly direction in the city of Detroit and is crossed practically at right angles by a main track of the defendant railroad company. On the afternoon of the day of the accident plaintiff was riding in a westerly direction on Elmhurst avenue in a Ford coupe, driven by her husband, at the rate of about five miles per hour and in a line of slow moving congested traffic. A short distance west of the intersection of defendant’s tracks with Elmhurst avenue and on the southerly side of the street is a parking lot for automobiles. Just as plaintiff and her husband reached the railroad tracks the congested line of traffic moving westerly was stopped by automobiles coming out of the parking lot. On tbis account the Ford coupe was stopped squarely on the tracks of defendant company. Both the automobile in front and the one in the rear of the Young’s automobile were standing immediately adjacent to the Young’s car. The traffic jam was such that this car could neither be moved forward nor backward. Defendant’s train involved in this accident approached from the south. Plaintiff had a clear view of the railroad track to the south for a distance of approximately 500 feet, at which point there was a curve in the tracks. As the locomotive of this train, consisting of 20 to 25 freight cars, came around the curve it was observed by both plaintiff and her husband. Its rate of speed was estimated at from 5 to 10 miles per hour. Plaintiff, after observing the approaching train, sat in the automobile while it was stopped on the track and watched the train proceeding toward her. When it was half way, about 300 feet down the track, it appeared to her to slacken its speed and plaintiff thought the train would stop. As the locomotive approached the automobile on the crossing the engineer sounded several blasts of the whistle which were heard by Mr. Young but which Mrs. Young stated she did not hear. Nonetheless she observed the approaching train, and made no attempt to get out of the automobile until the train was from 50 to 75 feet of the automobile. Mr. Young succeeded in getting out of the left-hand side of the car in time to get to a place of safety, but Mrs. Young, because of the character of her clothing and because she had some trouble with the door catch on her side of the car, was delayed somewhat in getting out; Notwithstanding this she succeeded in getting out of the car and proceeded toward the front of it in an effort to get to a place of safety as quickly as possible. Just as she was alongside the right front fender, the automobile was struck by the locomotive and in turn the right front portion of the automobile struck plaintiff and threw her forward and to her right upon the pavement and out of the path of the automobile which was pushed by the locomotive some 10 or 12 feet in a northerly direction before the train was brought to a full stop. The engineer, according to his testimony, had applied the emergency brakes about 80 feet south of the Ford coupe. From his side of the cab his vision, as he testified, was shut off by the locomotive boiler when it was about 200 feet from the crossing; but upon being warned of the situation by his fireman he applied the emergency brakes as above stated.
Plaintiff testified as follows:
“When the traffic in front of us did not move and the train continued to come on and Mr. Young ejaculated, then I, too, got out of the car. I started to get out at the same time he did. * * * I did not pull that catch (on the automobile door) far enough, and it did not open, and I was frigid with fear then. That is the first fear that I had really felt; * * * I had been in the car before, and there had been no trouble with the door.
" Q. And you were unable to move your automobile because there was a car directly ahead of you, and as your husband and you testified there was another automobile directly behind you, so you were just stuck on the railroad track and could not move one way or the other, is that right?
“A. That is right.
" Q. Then you continued to watch this train as it came towards you?
“A. Yes.
" Q. And you stayed right in the car, the automobile, until you decided that it would be a good idea to get out?
“A. That it was dangerous.
“Q. Yes; and at that time, when you started to get out, I think you told us that the train was about 40 or 50 feet away from the automobile.
“A. As near as I could judge.
“Q. Very close, anyway.
“A. Close. * * *
“Q. You were figuring it pretty close, weren’t you?
“A. No, I was not figuring it at all.
“Q. If you bad gotten out of tbe automobile when you first saw tbe train coming down on you, you would have had plenty of time to get out and get a block away?
“A. Yes.
“Q. And if you bad got out when tbe train was say 300 feet away you could have gotten out of there and gotten to tbe fruit stand (on tbe north side of Elmhurst avenue) before tbe train bit, couldn’t you?
“A. Yes.
“Q. So, if the train was, let us say, 200 feet away from your automobile, if you bad gotten out then you would have bad plenty of time to get to a place of safety?
“A. Yes. * * *
" Q. And on this day in question it was a pretty clear day in tbe fall.
“A. Beautiful day.
" Q. Nothing at all to obstruct your view?
“A. Nothing at all.
“Q. You could see up tbe railroad track just as far as your eyesight would carry?
“A. Perfectly.”
Under this record we are of tbe opinion it conclusively appears plaintiff was guilty of contributory negligence. Even if this train of cars was not approaching tbe automobile at a speed in excess of 5 or 10 miles per hour and it seemed to plaintiff to slow down somewhat, in consequence of which she assumed tbe train would stop in time to avoid tbe collision, still she was bound to exercise reasonable care for her own safety. This she did not do. Instead she remained seated in tbe automobile fully conscious of the approaching train for a period of time which was more than ample for her to have gotten out of the automobile and to a place of safety. Plaintiff not only had time in which to act in this matter but there was every reason why she should have done so. The automobile in which she was seated was hopelessly hemmed in by a blockade of other machines both in front of and in the rear of the car occupied by plaintiff. Plaintiff was not burdened with the responsibility of managing the auto in which she was seated. Her husband was driving. Instead of acting for her own safety, she took a chance on the impending accident being avoided by the train stopping or by the automobiles on the street moving in time to avoid the accident. Under the circumstances plaintiff was guilty of contributory negligence as held by the circuit judge.
The instant case in its legal aspect does not differ materially from Krouse v. Railway Co., 215 Mich. 139. It might well be said of plaintiff in the instant case, as we stated concerning the injured woman in the Krouse Case:
“It was her negligence in continuing in the place of danger after she was fully aware of her peril that was as much the efficient cause of the accident as defendant’s negligence. Such negligence on her part contributed to the accident as a proximate cause and precludes recovery even though defendant’s negligence operated up to the time of the accident.”
Regardless of holdings cited in appellant’s brief from other jurisdictions, in this State the law which controls this case is that of Krouse v. Railway Co., supra, and other cases of like character. See Larsen v. Railroad Co., 248 Mich. 506; Kraft v. Railway Co., 262 Mich. 494; Hichey v. Smith, 277 Mich. 123 (1 N. C. C. A. [N. S.] 167).
The judgment entered in the circuit court is affirmed, with costs to appellee.
Wiest, C. J., and Butzel, Sharpe, Potter, and Chandler, JJ., concurred with North, J. | [
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Sharpe, J.
This is an action for damages under the survival act, 3 Comp. Laws 1929, § 14040 (Stat. Ann. §27.684), by William C. Rohrkemper,administrator of the estate of Hazel Jackson, deceased.
On the night of October 30,1935, at about the hour of 1:40 a. m., deceased and her companion, Geraldine Bur, were returning from a party and were walking in a northerly direction along the westerly side of a highway known as M-56 in Monroe county. Defendant was driving his Ford car in a northerly direction and while passing a car proceeding* in the same direction, struck deceased and injured her so that she died at 2:25 the same morning.
The pavement at the place of the accident is about 16 feet wide with a berm at the side of from four to six feet. It is level and consists of grass and gravel. The berm or shoulder was dry, but the night was misty. The car operated by Irvin Bodenmiller, a brother of defendant, was proceeding* northerly on the extreme right side of the paved portion of the highway. The record shows that defendant, in attempting to pass the car operated by his brother, did not get beyond the paved portion of the highway; and that he first, saw the girls after he had turned out to pass his brother’s car, but did not see them until he was five feet from them. The brother’s car was traveling about 18 miles an hour when defendant attempted to pass it. As soon as the accident happened, defendant applied his brakes and stopped his car in about 30 feet.
Defendant was using his “dimmer lights.” Lights from cars approaching from the rear could be seen a distance of approximately 500 feet. The cause was tried before the court and without a jury. During the trial the witness Geraldine Bur testified that immediately prior to the accident, she and decedent were walking on the left side of the paved highway in single file with decedent in the rear. She also testified that they were walking on the paved portion of the highway; and that she told a Mrs. Masserant that they were walking side by side. At a later time during the trial she testified that she and decedent were walking on the berm or graveled surface adjacent to the highway.
The trial court made the following finding of facts:
“Plaintiff argues in substance that because pedestrians are by law entitled to use any part of a highway, they may proceed under all circumstances without looking back or exercising such care as a reasonably prudent person would use for their own protection.
“The court is of the opinion that the credible testimony in this case fails to sustain the burden placed upon plaintiff to show lack of contributory negligence in plaintiff’s decedent. * * *
“The court believes, under all the circumstances, that the rule of falsus in uno, falsus in omnibus should be applied to the testimony of witness Bur, and that it should be disregarded in its entirety. Were the court to do otherwise, he would still be obliged to find as a matter of fact that the credible testimony of said witness, together with the other testimony in the case, failed to sustain plaintiff’s burden of proof on the question of absence of contributory negligence on the part of plaintiff’s decedent. ’ ’
Plaintiff appeals and contends that the trial court erred in finding deceased guilty of contributory negligence as a matter of fact; and that the presumption that deceased exercised due care and was free from contributory negligence is applicable. '
In this cause there were two eyewitnesses to the accident and consequently there is no presumption that plaintiff’s decedent was in the exercise of due care. Collar v. Maycroft, 274 Mich. 376; Faustman v. Hewitt, 274 Mich. 458.
Plaintiff has the burden of proving that defendant was guilty of negligence and that plaintiff’s decedent was free from contributory negligence. Fish v. Railway, 275 Mich. 718.
In Janse v. Haywood, 270 Mich. 632, defendant while attempting to pass an automobile ahead of him, and when abreast thereof, ran down and killed two of three girls walking side by side on the left side of the highway. The girls were facing approaching traffic and defendant came from the rear and, to pass the car ahead, of him, turned into the other lane of traffic where the three girls were walking. Mr. Justice Wiest, speaking for the court said:
“The girls had the right to walk in the highway, facing approaching traffic and whether, under the circumstances, plaintiff’s decedent was guilty of want of reasonable care contributing toward the accident was also an issue of fact for the jury and not one of law for the court. ’ ’
As to the legal obligation of a pedestrian to look back to see whether there is danger of being struck from behind, in Pearce v. Rodell, 283 Mich. 19, this court said:
“There is no statute which says a person shall walk on any particular portion of a public highway which is open for the use of all the people without distinction for passage and repassage at their pleasure. A pedestrian may walk on any part of a public highway, and persons operating’ automobiles must use reasonable and ordinary' care not to run down pedestrians upon such highways. A pedestrian has a right to rely upon the presumption the driver of an automobile will exercise due care and is not, as a matter of law, required to look back for approaching vehicles. ’ ’
Deceased was not negligent in walking on any portion of the highway np until she had notice that defendant’s car was going to use that portion of the highway occupied by her and her girl friend.
. “Her duty to avoid the danger of injury did not arise until it became apparent, or the circumstances were such that an ordinarily prudent person would have apprehended its existence. Corey v. Hartel, 216 Mich. 675; Lawrence v. Bartling & Dull Co., 255 Mich. 580.”
As we review the record, we are constrained to hold that whether the lights and noise of defendant’s car gave plaintiff’s decedent warning that she was in a place of danger and whether this notice gave deceased sufficient time to get to a place of safety are questions upon which reasonable minds might differ. The determination of these facts was for the trial court who saw the witnesses and heard their testimony.
The trial court, sitting as a jury, found that “the credible testimony in this case fails to sustain the burden placed upon plaintiff to show lack of contributory negligence in plaintiff’s decedent.” It is well settled that the findings of fact of the trial judge are not disturbed unless against the clear preponderance of the evidence. Rollin v. Van Tine, 283 Mich. 208; Leonard v. Hey, 269 Mich. 491 (37 N. C. C. A. 111); Alexander v. Sanders, 279 Mich. 465.
The judgment of the trial court is affirmed. Defendant may recover costs.
Wiest, Chandler, and North, JJ., concurred with Sharpe, J.
McAllister, J. Hazel Jackson, a girl 16 years old, neglected by her parents, was a ward of the society of St. Vincent de Paul. She lived in Newport, Michigan, with a Mrs. Masserant, with whom the society made arrangements. On the night of October 30, 1935, she was returning home from a Halloween dancing party at St. Charles Church, at Oldport, Michigan. With her was another little girl about 14 years old, also a ward of the society of St. Vincent de Paul. Their way lay along highway M-56. The night was very foggy. As they proceeded home, walking on the left-hand side of the highway, the little girl, Geraldine Bur, was walking in front of Hazel Jackson. They were talking and laughing about the party and having a good time.
Defendant was driving an automobile on M-56 in the same direction in which the two girls were proceeding. Defendant’s brother was also driving another car ahead of defendant. Both cars were on the right-hand side of the highway. When the defendant’s brother was about to pass the girls, defendant decided that he would accelerate the speed of his car and pass his brother. In order to do this, he increased his speed and turned to the left to pass. As he was passing the other car, defendant crashed into Hazel Jackson, throwing her against the little girl who was walking with her. Defendant was driving with his lights dimmed. The fog was so thick that defendant did not see Hazel Jackson until he was within five feet of her — a fraction of a second before he struck her. He did not sound his horn or give any warning. Hazel died in Mercy Hospital in Monroe, Michigan, about an hour later. Her death was caused by a broken neck.
At the conclusion of all the proofs, counsel for defendant moved for judgment of no cause of action. The court, thereupon, after filing findings of fact, entered judgment for defendant of no cause of action.
In Ms finding’s of fact, the court stated that, after the noon recess, Geraldine Bur was recalled as a witness, ‘ ‘ and corrected her prior testimony so as to place the location of herself and plaintiff’s decedent, at and prior to the time of the accident, on the said berm and not upon the left half of the highway;” that, therefore, applying the rule of falsus in uno, falsus in omnibus, such testimony should be disregarded in its entirety.
A review of the testimony does not show that the witness corrected her testimony or that she had previously testified falsely. She stated in her first testimony: “We were wallring on the left side of the highway * * * we were wallring single file on the left-hand side of the highway.”
The term, “highway,” has various meanings. In the uniform motor vehicle act (1 Comp. Laws 1929, § 4693, subd. n [Stat. Ann. § 9.1561, subd. n]), it is defined as follows:
“Every way or place of whatever nature open to the use of the public, as a matter of right, for purposes of vehicular travel.”
The term is also used to designate the traveled portion of a highway, as well as the main traveled portion; and unless there is a specific reference to what is actually meant by the use of the term “highway,” it can reasonably refer to any of these meanings. In the case before us, the central portion of the roadway was covered with a hard asphalt surface 16 feet wide, with a g’raveled portion of roadway or berm on each side of the asphalt several feet in width. The fact that the witness testified that she and plaintiff’s decedent were walking on the left-hand side of the highway does not necessarily indicate that she meant that they were walking on the left half of the paved portion. It is not apparent from the record that there was any such contradictory testimony as wonld justify the court in concluding that any of the statements of the witness in this regard were false. They were not contradictory in terms. If it be considered that the statement made in the subsequent examination was not identical in language to the previous testimony, it certainly could be reconciled as a truthful account. Geraldine repeatedly testified that neither she nor Hazel were walking on the pavement, but were on the graveled portion at the side. She had not previously testified that they were on the pavement; but it is unnecessary to determine the case on the question of whether the girls were on the pavement or not at the time of the accident.
The only witness to the accident was defendant, who did not see decedent until he was only five feet from her. At that time, he was passing the other car which was proceeding at a speed of approximately 20 miles per hour. Defendant, therefore, was traveling more than 30 feet per second so that there was less than one-sixth of a second between the time when he first saw Hazel and the happening of the accident. Geraldine did not see the impact. She was struck from the rear by the body of plaintiff’s decedent which had been thrown toward her by defendant’s automobile.
Under the circumstances disclosed, there is a presumption that plaintiff’s decedent was in the exercise of due care at the time of the accident.
In Gembolis v. Rydeski, 258 Mich. 521, 523, it was said:
“It is claimed that plaintiff’s decedent was guilty of contributory negligence. The driver stated that he did not see decedent until almost the instant when he struck him. Under the circumstances, we must assume that decedent was exercising due care for his safety. ’ ’
In Baker v. Delano, 191 Mich. 204, 209, it was said:
“We are of the opinion that it is clear that it is the rule in this State that the presumption that a plaintiff is free from contributory negligence can bo said to apply only in cases where there is an absence of any direct evidence to the contrary. The question then is, was there evidence before the trial judge which could be said to overcome the presumption relied upon?”
In Pentz v. Wetsman, 269 Mich. 496, 498, the court quoted with approval as follows:
“ ‘The presumption that a decedent was in the exercise of due care does not obtain where there are credible eyewitnesses to the occurrence. Nor is it a conclusive presumption. It may be rebutted by direct or circumstantial evidence and circumstances themselves may be sufficient to raise an issue of fact for the jury or to demonstrate the existence of contributory negligence as a matter of law. Gillett v. Michigan United Traction Co., 205 Mich. 410.’
“ ‘The presumption indulged in favor of the plaintiff that he was free from negligence contributing to the injuries sued for will be overcome by specific averments of facts which show that he knew, or had the opportunity to know, of the danger, and, knowing of the danger, did not use care commensurate therewith.’ City of Lafayette v. Fitch, 32 Ind. App. 134 (69 N. E. 414).”
A case well illustrating the effect of direct rebutting evidence is Mynning v. Railroad Co., 64 Mich. 93, 102 (8 Am. St. Rep. 804), where it was said:
“The presumption of law is that the person killed at a crossing did stop, and look and listen, and will prevail in the absence of direct testimony on the subject. But where there is affirmative, direct, and credible testimony that the person injured went upon the track without stopping to look and listen, the presumption is rebutted and displaced.”
In consonance with the above expressions of this court, it may be said that where there is an absence of any direct evidence that plaintiff’s decedent was guilty of contributory negligence, the presumption is that he was free from such negligence.
In Gillett v. Michigan United, Traction Co., 205 Mich. 410, 415, it is said:
“ A distinction has been recognized between direct, positive and credible rebuttingevidence and mere circumstantial evidence having but a slight or inconclusive tendency to rebut the presumption. "When direct, positive and credible rebutting evidence is introduced, the presumption ceases to operate; but when circumstantial evidence of doubtful value is the only rebutting evidence offered, the question should be submitted to the jury, and if they decide that the circumstantial evidence should be disregarded, the presumption is still sufficient to establish plaintiff’s case as to the exercise of proper care by the deceased. Moreover, it is only in cases where direct testimony of credible eyewitnesses as to the negligence of deceased is uncontradicted, that the court is warranted in directing a verdict for the defendant on the ground of decedent’s contributory negligence. If the testimony is contradicted by other witnesses, or rendered improbable by the circumstances, or if the credibility of the witnesses is attacked, the question must be submitted to the jury, but in such case the jury must weigh merely the evidence, unaided by the presumption. If, however, the jury decide that the testimony tending to show negligence on the part of the deceased in the particular claimed has been overcome by other evidence and should be disregarded, the presumption will, of course, if neces sary, still operate to establish, plaintiff’s case as to the care exercised by the deceased. The attempt to rebnt the presumption having failed, it still remains in force so far as may be necessary to cover any particulars not touched on by the evidence. There is no reason why an unsuccessful attempt to show the negligence of deceased in some particular respect should place upon the plaintiff the burden of proving by affirmative evidence that the deceased used due care in all respects — a burden which did not rest upon him before the attempt was made. ’ ’
In Gates v. Beebe, 170 Mich. 107, 112, the court in discussing the presumption of due care said:
“A careful'examination of available cases in other courts shows that the rule is that such presumption prevails only in the absence of direct testimony on the subject. In Mayo v. Railroad, 104 Mass. 137, 140, the court said:
“ ‘All tlie circumstances under which the injury was received being proved, if they show nothing in the conduct of the plaintiff, either of acts or neglect, to- which the injury may be attributed in whole or in part, the inference of due care may be do-awn from the absence of all appearances of fcmlt.’
“To the same effect the supreme court of Iowa has held:
‘ ‘ ‘ The rule as to the inference which may be drawn from the instinct of self-preservation has been fully discussed in recent eases in this court, and need not be elaborated. The consideration of the instinct of self-preservation is to be limited to eases in which there is no direct evidence bearing on the question whether or not the injured party was in the exercise of due care at the time when the injury occurred. Bell v. Clarion, 113 Iowa, 126 (84 N. W. 962); Ames v. Waterloo & Cedar Falls Rapid Transit Co., 120 Iowa, 640 (95 N. W. 161).’ Phinney v. Railway Co., 122 Iowa, 488, 492, 493 (98 N. W. 358).”
In Baldwin, Personal Injuries (2d Ed.), at page 564, § 458, the rule is stated as follows:
“The presumption of law is that a person killed at a crossing did take proper precaution. In such a case, while the rule is not relaxed that the intestate was without fault, yet the presumption, in absence of any evidence to the contrary, obtains that the deceased used ordinary care and caution in attempting the crossing of the crossing; and such presumption is sufficient under the rule to permit the plaintiff to recover upon showing negligence of the defendant.
“While, in the case of fatal injuries, the absence of contributory negligence is a part of the plaintiff’s case, this only requires that it be shown that the decedent acted with due care. This only requires that the plaintiff put in evidence, the facts and circumstances attending the injury, and if these show negligent conduct in the defendant from which the injury followed as a direct and proximate consequence, and do not show any contributory negligence in the decedent, a prima facie case for a jury is made up. In such cases, where there were no eyewitnesses to the accident, it would be impossible for the plaintiff to go further.
“Although, in cases of fatal injuries, the decedent will be presumed to have been in the exercise of due care when the attendant circumstances do not indicate the contrary, yet it is still incumbent upon the plaintiff to show the negligence of the defendant, and that the injury was caused by such negligence.”
In Petersen v. Lundin, 236 Mich. 590, Mr. Justice Wiest, speaking for the court, in discussing the presumption of due care on the part of the deceased where defendant %oas an eyewitness whose testimony was limited to his view of the deceased a moment before the accident, said, at page 592:
“Defendant was the only eyewitness of the accident and was called by plaintiff for cross-examination under the statute. It is claimed that his testimony established contributory negligence on the part of Mr. Petersen. In behalf of defendant it is said that the presumption of care allowed by law in cases where there are no eyewitnesses cannot be indulged because defendant was an eyewitness and his testimony established want of care on the part of Mr. Petersen. Defendant’s testimony was limited to a view of decedent at the very moment he was in front of the automobile and just as he was struck. Defendant did not see decedent before he was in front of the automobile, and the case is barren of witness evidence of what care decedent exercised before he got in the path of the automobile. The fact decedent was in a place' of danger did not require a finding of want of care, for this would make the happening of the accident evidence of contributory negligence on his part, and this can no more be done with reference to contributory negligence than it can upon the question of defendant’s negligence. The care required of Mr. Petersen was exercised or not as he approached the path of the automobile and at such point defendant did not see him. In the absence of testimony showing the actions of Mr. Petersen as he approached the path of the oncoming automobile, the law permitted the presumption of due care on his part to carry the issue to the jury. This being true, the court was not in error in instructing the jury that they should assume Mr. Petersen saw the automobile. Such instruction was no more than the application of the presumption that Mr. Petersen was exercising due care.
“The ruling asked in behalf of defendant would, in effect, make a pedestrian guilty of negligence as a matter of law if he so conducted himself as to get into the path of an automobile. On a dark, misty night the distance automobile lights are away is somewhat deceptive, and also the speed of an automobile. Persons do get in the path of automobiles even while exercising due care. There is no rule of law requiring a pedestrian to rivet his eyes on an approaching automobile. He should look but if, having looked, it appears safe to cross, he may proceed, and bis care is not to be determined solely by tbe fact he was struck and was not at tbat second looking* at tbe automobile.
“What was said by Mr. Justice Steere, writing for the court in Patterson v. Wagner, 204 Mich. 593, is apropos here:
“ ‘On the assignment of error that deeeased was. guilty of contributory negligence which precluded recovery and for that reason a verdict should have been directed for defendant, it is to. be borne in mind that this accident occurred at a crossing and the injured party is dead. His mouth is closed as to how he came there, what observations he made, whether or not he looked before starting to cross, if so, what judgment he exercised in regal'd to what he observed. * * * It is true when there are eyewitnesses to- the accident, the legal presumption that a decedent was free from contributory negligence does not obtain to the full extent as in cases where there were none (Baker v. Delano, 191 Mich. 204), but no witness is shown to have observed deceased until he stepped off the curb into the street at or near a proper crossing for foot passengers, where he had a right to be, and apparently reason to go, on his way home, and where it was also defendant’s duty to exercise special care in anticipation both of crossing pedestrians and vehicles. ’ ’ ’
Under tbe authority of tbe foregoing cases it cannot be maintained tbat simply because there was an eyewitness to tbe accident, tbe presumption of due care is destroyed. Tbe mere fact tbat there was an eyewitness who could testify to no more than tbat be bad seen deceased at tbe instant of tbe accident would not render inoperative tbe presumption of due care. Such a witness would know nothing whatever of tbe facts or circumstances which might show negligence or raise inferences of negligence. A witness might have been a great distance away. He might have seen tbe fatal impact at night with only a moment of light to illumine tbe actual instant of collision. A momentary glance tbat would reveal only tbe impact could not detract from tbe presumption of due care. Such minute, meaningless and unrelated fragments of circumstance, flashing* and instantaneous, uncolored by fault or by the faintest inference of fault, cast no shadows upon the presumption.
The trial court was bound to give effect to the presumption of due care on the part of plaintiff’s decedent until it was overcome by evidence showing contributory negligence.
What evidence was there that decedent was guilty of contributory negligence? Was there direct, positive and credible evidence to rebut the presumption of due care?
Decedent was on the highway where she had a proper rig’ht to be. In Pearce v. Rodell, 283 Mich. 19, 34-36, Mr. Justice Potter, speaking for the court, said:
“A pedestrian may walk on any part of a public highway, and persons operating’ automobiles must use reasonable and ordinary care not to run down pedestrians upon such highways. A pedestrian has a right to rely upon the presumption the driver of an automobile will exercise due care and is not, as a matter of law, required to look back for approaching vehicles. * * *
“ ‘Each, individual of the entire public, as a general rule and in the absence of especial regulation by law, has as good right to be upon the common street or highway as any other individual thereof. * * * Hence, he is not bound to look back, or to listen for the coming of another, so as to make clear the way before him.’ * * *
‘ ‘ ‘ It seems to us that, as decedent was lawfully upon the highway, using the extreme right-hand paved roadway, he could safely assume, as his rights were equal with those of the users of motor or horse-driven vehicles, that he would not be struck from the rear by any sueh vehicles. ’ * * *
“ ‘We are cited to no ease, and know of none, which casts upon a pedestrian travelling the street the duty of keeping a constant lookout to the rear as matter of law. The question of what constitutes due care in such a ease is for the jury.’ ”
There was no duty on the part of decedent to move off the highway until the circumstances were such that an ordinarily prudent person would have ap pretended the existence of danger. Lawrence v. Bartling & Dull Co., 255 Mich. 580. She had a right to assume that defendant would use ordinary care for her protection. Pearce v. Rodell, supra. She could assume that defendant would not violate the statute by overtaking and passing the other automobile on the left side of the road unless the way was clearly visible to permit such passing to be made in safety. 1 Comp. Laws 1929, § 4707 (Stat. Ann. § 9.1575). She was warranted in assuming that defendant would not drive his car at a speed greater than would permit him to bring it to a stop within the assured clear distance ahead. 1 Comp. Laws 1929, § 4697 as amended (Stat. Ann. § 9.1565). She had the further right to assume that he would not suddenly turn to the left in the fog and run her down.
“"When one is standing in the street in a place where he has a right to be, or is walking along the highway, he can properly assume that the driver of a motor vehicle will not run him down, but will avoid contact with him. And he may also assume that the driver of an approaching machine will give a signal of warning so that an accident may be avoided.” Huddy on Automobiles (5th Ed.), p. 593, § 471.
In Winckowski v. Dodge, 183 Mich. 303, 308, it was said:
“The undisputed evidence that defendant’s car was on the wrong side of the road, passing the vehicle it was meeting’ on the left, alone raises a presumption of negligence on the part of its driver, and when such negligence is shown to have had a causal relation to the injury inflicted upon the plaintiff, as is the case here, a prima facie case of actionable negligence is presented.”
In Justice Sharpe’s opinion it is said that whether the lights and noise of defendant’s car gave plain tiff’s decedent warning that she was in a place of danger was a question of fact under which she could be found guilty of contributory negligence. I am not in agreement with such conclusion; but even though it be conceded, nevertheless, this question was not passed upon by the court. The case was decided, not upon a question of fact, but a question of law. The court did not find that plaintiff’s decedent was guilty of contributory negligence. The decision was based, not upon evidence, but upon a rule of evidence governing presumptions. The court held that it was the duty of plaintiff to prove, affirmatively, absence of contributory negligence. This was erroneous for plaintiff was entitled to the presumption of due care.
With regard, however, to the question of evidence showing contributory negligence, there was no evidence that the car was noisy. G-eraldine Bur testified: “I couldn’t hear the automobiles as they came up behind me.”
This court has taken judicial notice of the fact that automobiles with the speed of railroad trains can range the road in substantial silence. Patterson v. Wagner, 204 Mich. 593. We should not assume, in the absence of evidence, that the automobile in question was so noisy as to give plaintiff warning of being in peril, in order to sustain a holding* of contributory negligence against her, overcoming the presumption of due care.
As for the lights, they were not sufficient to enable defendant to see ahead more than five feet. The lights were dimmed; there was a thick fog*. Under these undisputed facts, the testimony of defendant’s brother that such dimmed lights could be seen in such a fog, coming* from behind, at a distance of 500 feet, can be dismissed as absurd. It is in conflict with common knowledge and common sense. Appellate courts, although declining to review the facts, unless against the g'reat weight of the evidence, cannot supinely give credence to such outlandish pretensions, disguised as fact; and justice is not subserved by such a formality. "When the same witness was subsequently asked whether he could see, in his driving mirror, the lights of defendant’s car, 50 feet to his rear, when defendant started to turn left to pass him, he said: “Well, it was foggy.”
The flimsy testimony as to the lights, and the evidence, or rather lack of it, as to the noise of the car, under the circumstances of this case, cannot be said to be the direct, credible, and rebutting evidence necessary to overcome the presumption of due care. See Gillett v. Michigan United Traction Company, supra.
The trial court held “that the credible testimony of said witness (Geraldine Bur) together with the other testimony in the case, failed to sustain plaintiff’s burden of proof on the question of absence of contributory negligence on the part of plaintiff’s decedent.” Under the circumstances of this case, such holding is reversible error.
While the burden of proof is upon the plaintiff to establish his case, nevertheless, where there is a presumption of due care, the burden of going forward with evidence, in order to rebut such presumption, is upon the defendant.
“The office or effect of a true presumption is to cast upon the party against whom it works the duty of going forward with evidence. It has the force and effect of a prima facie case, and, temporarily at least, relieves the party in whose favor it arises from going forward with the evidence.” 1 Elliott on Evidence, p. 114, § 91.
There was no burden placed upon plaintiff’s decedent to show absence of contributory negligence. The deceased is presumed to have been in the exercise of due care. Because of the presumption, the burden of overcoming the prima facie case was upon the defendant. Where a presumption of due care exists, it can only be overcome by evidence showing contributory negligence. Even where rebutting circumstantial evidence is offered, if such circumstantial evidence can be disregarded as being of doubtful value, the presumption is sufficient to establish plaintiff’s case as to the exercise of proper care by the deceased. Gillett v. Michigan United Traction Co., supra.
For error in holding that the burden was upon the plaintiff to show, by credible testimony, absence of contributory negligence on the part of the deceased, in spite of the presumption of due care, the judgment should be reversed and a new trial granted, with costs to plaintiff.
Bittzel,' C. J., and Bushnell and Potter, JJ., concurred with McAllister, J. | [
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North, J.
Plaintiff filed a bill in equity for the cancellation of a deed given by him to the defendants. Belief was sought on the ground that defendants had breached the contract which constituted the consideration for the deed. From a decree granting the relief prayed the defendants have appealed.
This case is typical of most cases of its class in that it arises out of a transaction that never should have been consummated. Prior to May 15, 1934, plaintiff was the owner of a 40-acre farm in Kingston township, Tuscola county. There was a comfortable dwelling on the place and other reasonably suitable farm buildings. The value of this property was approximately $2,000, and it was subject to a mortgage of $240. In 1934 plaintiff was about 75 years of age. His wife had been dead for several years. While plaintiff had children, none of them were living with him. His son, Charles Ferguson, and the son’s wife lived in Flat Bock. A number of years before they had lived on the farm with plaintiff and his wife. Plaintiff wanted them to come to the farm to live and make a home there for him during the remainder of his life. As a result of his talking to defendants concerning this, they moved onto the farm in the spring of 1934. Shortly thereafter plaintiff gave defendants a warranty deed of the farm, subject to the $240 mortgage; and defendants simultaneously gave plaintiff a life lease. The consideration recited in the life lease was an assignment to defendants by plaintiff of all of his personal property, consisting “of all livestock, tools and household effects.”
Immediately after delivery of these papers plaintiff became dissatisfied, complaining that now he had nothing. The undisputed testimony is that Charles then told his father if he so desired they would have the whole transaction set aside, and Charles prepared to have this done; but thereupon plaintiff changed his mind, cried, and wanted defendants to remain with him. For something like a year the parties got along without trouble; then matters of a petty nature began to lead to unpleasantness. Each claims the other was primarily at fault. Plaintiff testified that Charles addressed him on one occasion in particular in decidedly violent and profane language, but this was denied by Charles. Plaintiff complains that Charles and the other members of the household would not talk to him; that defendants did not get for him some simple remedy that he wanted to apply to his knees on account of lameness; that they would not provide him with $5 with which to purchase a truss that he needed and he was compelled to earn the money for this purpose by husking corn; that his bed and bedroom were repainted contrary to his wishes. At one time plaintiff consulted the supervisor of the township, telling him defendants were so mean to him that he could not continue living with them. The supervisor attempted to bring about better relations between these parties, and testified that after he talked to the defendants he thought ‘ ‘ conditions improved. ’ ’ But again, in the spring of 1937, plaintiff complained to the supervisor, and as a result, after having talked with defendants, the supervisor took plaintiff at his request to the county farm and he remained there until this case was heard in the circuit court the following September; ánd, so far as we are advised, he is still there. On one of his visits the supervisor told plaintiff in substance that since he held a life lease he could make defendants move off the place. Belying on this advice plaintiff told Charles he “better move out;” and plaintiff testified that Charles, using profane language, said, “there will be blood all over this floor before I will move out of here.” This was denied by Charles.
There is some uncertainty in the record as to whether at one time Charles indicated he would pay for plaintiff’s keep at the county farm at $4 per week. It is undisputed that defendants have not contributed anything to plaintiff’s maintenance since he went to the county farm. They give as an explanation that they were without sufficient means to do so. In this connection it may be noted that though defendants kept and operated an automobile, they did not go to see plaintiff dr communicate with him after he left his home; at least this is the fair inference from the record. Charles testified he took legal advice and his counsel said, “Let him be over there a while, maybe it will learn him, something;” and in his testimony Charles further explained: ‘ ‘ The reason I didn’t go, I knowed his disposition. If I asked him to come back it would be the same thing.” On one occasion after becoming an inmate of the county farm plaintiff returned to his home; he said he could see in the house and hear the folks talking, that he sat down on the doorstep and was not asked to come in. Later, on his return to the county farm and after lie had telephoned to his former home for his underclothes, they were handed out to him by a granddaughter as he passed the place.
Defendants claim plaintiff brought on their trouble by reason of his bad disposition, by persisting in doing annoying things about the household, making trouble about the use of the radio, insisting upon digging potatoes before they were ripe, and that he became dissatisfied with the home defendants provided for him. without any just cause and left of his own accord.
Too many of the details have already been covered. It quite conclusively appears that the plan and contract these parties entered into cannot be carried out. While not recited in either the deed or life lease, clearly the undertaking was that defendants would provide plaintiff with a suitable home, give him proper care and maintenance, and a decent burial at death. They assert they have provided a suitable home and treated him kindly, and are willing to continue to fulfill their part of the undertaking. Such assertions do not check favorably with the easy manner in which defendants have acquiesced in permitting the father to remain a public charge. Instead it lends credence to plaintiff’s story as to defendants’ generally unsympathetic, if not cruel, attitude towards him. Certain it is that the contract cannot be carried out; and we think defendants have not made a bona fide effort to do so. Instead they have been too intolerant of the eccentricities of old age, a phase of the undertaking which they were bound to have anticipated. The circuit judge was right in decreeing cancellation of plaintiff’s deed to defendants.
We have reviewed the record having to do with adjusting incidental property rights of the parties. Defendants have made some permanent improvement, such as installing electric lights. They have paid taxes, insurance and interest, hut have not paid the $240 mortgage. The actual farm work has been negligible; hut defendants sold the personal property delivered to them by plaintiff and they have had the use and occupation of the premises since the spring of 1934. They have contributed nothing to plaintiff since he went to the county farm in the spring of 1937. Accounts of this character cannot he balanced to a nicety; and we are of the opinion that these incidental rights of the respective parties were carefully considered and rightly adjusted by the decree of the circuit judge.
If defendants are still in possession of the property, they will he given 15 days after the filing of this opinion within which to vacate; otherwise than this the decree entered in the circuit court is affirmed, with costs to appellee.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. | [
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Butzel, J.
Plaintiff obtained a decree of divorce from defendant on January 21, 1942, in the circuit court for the county of Wayne. The decree provided for a property settlement In October of the same year, plaintiff sought a modification of the decree alleging that defendant 'fraudulently concealed from plaintiff certain property owned by him prior to and at the time of the divorce. The matter was referred to the friend of the court who recommended the granting of a motion to dismiss made by defendant. Plaintiff filed objections to the recommendation. After a hearing, plaintiff’s petition to modify was dismissed without prejudice on April 13,1943. She neither appealed from the order of dismissal nor did she take any further action until June 23, 1944, when she filed the. bill in the instant case. She alleged that the property settlement of January 13, 1942, had been entered into as a result of -defendant’s fraud in concealing from, her and the court his possession of a deed to certain described premises dated May 10, 1938. She claims that the deed was delivered to defendant prior to the entry of the divorce decree containing the property settlement, although the deed was not recorded until February 5, 1942, after the entry of the decree. Plaintiff further alleged that defendant instituted eviction proceedings on February 2, 1940, against the tenant of the premises described in the deed, and stated therein that he was the landlord of the premises. Plaintiff also claimed that subsequent to the entry of the decree of divorce and the death of the grantor of the deed, who was the mother of the defendant, the will of the de ceased was filed in the probate court devising the property to defendant; that thereafter certain heirs of the testatrix filed notice of contest of the will; and that plaintiff was informed and did believe that defendant advised those heirs that he had been the owner of the premises since May, 1938, whereupon the will contest was discontinued. Plaintiff alleges that she entered the property settlement in reliance upon defendant’s sworn statement as to the property he owned; that the undisclosed property has a value of between $8,000 and $10,000, and therefore, the settlement was unfair and inequitable. Plaintiff seeks to have the -decree of January 21, 1942,- vacated in its entirety and a new decree entered in this case granting her an absolute divorce, custody of the minor children, alimony and a division of all of the property of the parties, including an accounting and share in the disputed parcel that was not considered at the hearing of the divorce suit. Defendant appeared specially for the purpose of filing a motion to dismiss. He contends that the .cause of action is barred by the prior decree in the divorce action; that the bill of plaintiff fails to make out a case of fraud; that the property settlement 'had been entered into with the- consent and agreement of the parties and their respective counsel and was final and not subject to an attack by a new bill in chancery. Defendant also filed an affi-' davit with the friend of the court in which he stated that when the decree was entered the property in question was still owned by his mother but that his mother, in contemplation of death, had delivered a deed of the premises to him on February 2, 1942; that the proceedings before thfe circuit court commissioner of Wayne county were undertaken by him as agent for his mother; that he had never stated to any one that he was the owner of the property; and that plaintiff had ‘knowledge of the fact that the property was owned by defendant’s mother at the time the decree was entered.
The trial judge, upon her own initiative and without objection by plaintiff or her counsel, checked the- circuit court commissioner’s files and ascertained that the complaint and affidavit to recover possession of the disputed premises were signed in the name of defendant’s mother by the defendant.
The trial court held the amended bill of complaint was based largely on information and belief and did not make a sufficient showing of fraud; that the proceeding was in the nature of a bill of review, and that bills of review having been abolished, the court did not have jurisdiction. Decree was entered dismissing the bill of complaint. Plaintiff appeals.
In Fries v. Wonnacott, 270 Mich. 86, we quoted with approval the following definition from Bouvier’s Law Dictionary:
“A bill of review is one brought to have a decree of a court reviewed, altered or reversed.”
Under Court Rule No. 48, §4 (1945), the remedy by bill of review was abolished and superseded by motion for rehearing. Court Rule No. 48, § 1 (1945), provides:
“On proper cause shown, a rehearing of an equitable action may be had. No application for such rehearing shall be heard unless filed within 2 months from the entry of the final decree, except where application is made on the ground of newly-discovered evidence, in which case the application must be filed within 4 months.” t
It is plaintiff’s contention that her new bill of complaint, as amended, is not a bill of review because the fraud alleged therein is “extrinsic” as distinguished from “intrinsic” fraud. In Dodge v. Detroit Trust Co., 300 Mich. 575, 609, this Court stated:
“Had there been intrinsic fraud, remedy would .have been by motion for rehearing and appeal; had there been extrinsic fraud only by prompt action and proper showing would plaintiff have had a footing in an equity court. ”
In the instant case, plaintiff, did not take an appeal _ from the order dismissing her petition to modify the original decree of January 21, 1942; nor is any explanation offered for plaintiff’s delay, from April 13, 1943, the date of the order dismissing the 'petition to modify, until June 23, 1944, in filing her bill of complaint. The alleged fraud which prompted the petition to modify the original decree is the very same fraud which is the basis for the bill of complaint filed more than 14 months after the dismissal of the petition to rqodify. It is this feature of the instant case which, among others, distinguishes it from Lantinga v. Lantinga, ante, 78.
Under the circumstances, we believe the court properly dismissed the bill of complaint.-
The decree is affirmed, with costs to defendant.
Carr, C. J., and Bushnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Btjtzel, J.
On October 14,1944, Raymond Clark, a child 3% years of age, was struck by a streetcar owned and operated by defendant and was so severely injured that it was necessary to amputate both of his legs, one above and the other below the knee. Defendant entered into negotiations for settlement with the parents of the crippled child. A settlement was finally agreed upon by which the father was to receive $5Q0 for damages sustained by him individually and $2,000 as the child’s guardian. Defendant’s attorney prepared a petition for the appointment of tfie father as guardian and another petition for leave to settle the claim, both of which were signed by the father. The child’s mother indorsed her consent on the petition for leave to settle. The petition for guardianship indicated the child’s age. A hearing on both petitions was held on December 18, 1944, before' a judge of the probate court for the county of Wayne. At the hearing, Attorney for defendant made the following statement to the court:
“The file discloses that this is a nonliability case and we are just making a settlement with the father of the minor; all of our witnesses have shown that the child ran out in front of the streetcar from one side of the street to the other in front of the streetcar and was struck by the left corner of the streetcar; the motorman was unable to stop in time to avoid this accident.”
Counsel then interrogated the father as follows:
‘ ‘ Q. You have talked settlement with the D. S. R. in this case ?
“A.' Yes, sir.
“Q. And they have agreed upon the same?
“A. Yes, sir.
“Q. Is the same satisfactory to you?
“A. It is.”
In reply to counsel’s query whether the court had any questions, the probate judge replied:
”1 think the settlement is a good one because there wouldn’t be any liability individually; the court will appoint Clarence Clark guardian of Raymond Clark, the minor, and fix the bond at $100 and the petition authorizing’ the settlement is granted as prayed and I will sign the order. ’ ’
The father was duly appointed guardian, an order authorizing the settlement of the guardian’s claim for $2,000 was entered; and defendant paid plaintiff the total sum of .$2,500, representing the claims of the father individually and as guardian. '
Subsequently, on the advice of an acquaintance, plaintiff consulted an attorney and informed the latter that he did not understand that the settlement entered into with defendant constituted a release in full of the child’s claim, but, on the contrary, that he had been told by defendant’s adjuster that the settlement was a partial one, and that defendant would pay him more money from time to time as the need arose. On advice of counsel, plaintiff filed a petition in the Wayne county probate court on March 16, 1945, less than three months after the settlement was authorized, to set aside the order of authorization. A hearing was held before the same probate judge on May 18, 1945, and the probate court was informed of the nature of plaintiff’s claims. Plaintiff stated that he was 34 years of age and had only gone as far as the third grade in a southern school. He, however, could read and write. Plaintiff’s attorney stated that as the result of an investigation plaintiff could produce witnesses who would testify that the injured child, in the company of several other children, was crossing the street; that when he reached the northbound streetcar track, he saw the streetcar approaching him and became petrified with fear; that the streetcar was at least 25 feet away; and that notwithstanding the perilous position of the child, the motorman ran, the child down causing him permanent injuries that will incapacitate him for life. At the conclusion of the hearing the probate judge entered an order setting aside the original order authorizing the settlement. Counsel for defendant requested that as a condition of setting’ aside the original order, the court require that plaintiff return the consideration received by him from defendant in settlement of the child’s claim. This request was denied. The probate judge stated:
“Where a settlement involves á minor and there is a reasonable doubt in the mind of the court as to whether it is adequate and fair and I am not charging any one with misleading the court * * * I feel that the settlement should be set aside. * * * It is quite evident that the father, from. my observation in court, was not capable of thoroughly appreciating the fact of and the consequences of the settlement. * * * I am not going to make any condition to tender back the money; the order will be set aside; the order is made unconditional.”
Defendant appealed to the Wayne county circuit court where proofs were again taken and there was an adjudication of no fraud. Accordingly, a judgment was entered affirming the order of the probate court on condition that within 20 days from the date of the judgment plaintiff return to defendant the sum of $2,000 that he had received in accordance with the original order of the probate court authorizing the settlement, and that in default of such repayment the settlement was to stand and the order of the probate court setting aside the original order of authorization be reversed. Plaintiff appeals from the order of the circuit court.
It is appellant’s contention that the agents of defendant misrepresented to him and the probate court the true nature of the settlement and that by reason of such misrepresentation and fraud he is relieved of all obligation to return or tender back the consideration received from defendant. Appellant claims that defendant’s attorney led the probate court to believe that the accident was caused solely by the carelessness of the minor whose age and resultant incapacity to be held guilty of contributory negligence were not disclosed. The petition tion for appointment of the father ás guardian, however, clearly states the child’s age. The' probate judge knew as a matter of law that the child could not be guilty of contributory negligence. What is most significant, however, is the fact that in setting aside the order authorizing the settlement, the probate judge specifically stated that he was not charging any one with misleading the court; and the circuit judge, with the record of the proceedings in the probate court before him, was unable to find any basis for the allegation that defendant had deceived the probate court.
We have frequently held that where there is fraud in the execution of a release of a claim for personal injuries, as distinguished from fraud in the inducement, a tender back of the consideration received is not a condition precedent to the avoidance of the release. Porth v. Cadillac Motor Car Co., 198 Mich. 501; Barriger v. Ziegler, 241 Mich. 83; Hoban v. Ryder, 257 Mich. 188. Cf. Randall v. Railway Co., 215 Mich. 413. Defendant’s alleged misrepresentation to appellant that the settlement entered into did not constitute a release in full of the injured child’s claim would be tantamount to fraud in the execution. See note (1941) 134 A. L. R. 49. In Porth v. Cadillac Motor Car Company, supra, this Court held as follows:
“One signing a release of damages for personal injuries is presumed to have executed ihunderstandingly, and prima facie it must be taken as truly stating the agreement of the parties, and the burden of proof is upon him not only to show by a preponderance of evidence that it is not true, but that he was fraudulently deceived and misled by what was done and said into believing that he was signing a mere receipt for money paid under a contract different from that stated in it.” (Syllabus).
Appellant’s claim that he did not fully understand the nature of the settlement and the effect of the probate court’s order of authorization taxes our credulity. In the affidavit attached to the petition for leave to settle, appellant signed and swore that he had read the foregoing petition by him subscribed. The probate judge was persuaded that appellant did not fully comprehend the consequences of the settlement; furthermore, the judge entertained a reasonable doubt as to the adequacy and fairness of the settlement as the result of which he quite properly set aside the original order of authorization. On the basis of the record before us, it cannot be said, however, that appellant has established that he was fraudulently deceived and misled by defendant. Appellant having failed to establish such fraud, the order authorizing the settlement could not be set aside without a tender back of the $2,000 paid to plaintiff in his capacity as guardian of the injured child.
Defendant contends that the answer to the sole issue involved is found in 3 Comp. Laws 1929, §14512 (Stat. Ann. §27.1438), which provides:
“Seo. 7. In case any amount of money is collected on any judgment or decree, if such judgment or decree be afterwards reversed the court shall award restitution of the amount so collected with interest from the time of collection.”
Appellant contends that this statute refers to judgments and decrees for payment of money and does not apply to orders that are merely permissive. In McMann v. General Accident Assurance Corp., 276 Mich. 108, this Court stated:
“Appellant argues that the probate court’s action in the premises was purely permissive and that its order does not bar this action. No authority, however, is cited. We do not view the probate order of approval in this manner; it was, in effect, a judgment that the proposed settlement was fair and just and except by appeal therefrom or by direct attack in equity for fraud, no other inquiry may be made into its sufficiency.”
In Gayden v. Arabais, 292 Mich. 651, we held that it was a question of fact for the jury under conflicting testimony as to the circumstances of execution whether the money paid to plaintiff was in full settlement or not. In the instant case no jury was requested in the circuit court. In the light of the finding of no fraud by the circuit court, and the applicable statute hereinbefore cited, we believe that the circuit judge was correct in holding that appellant must tender back the $2,000 received in settlement within a limited time as a condition precedent to having the original order authorizing the settlement set aside.
The judgment of the circuit court is affirmed except that plaintiff will he entitled to 20 days from the date that this opinion is handed down in which to tender repayment of the $2,000, and the case is remanded to the circuit court for that purpose. • In all other respects it is affirmed, with costs to appellee.
Carr, C. J., and Bttshnell, Sharpe, Boyles, Bbid, North and Dethmers, JJ., concurred. | [
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Sharpe, J.
This is an appeal from an order construing the last will and testament of George H. Martz which was executed on October 24, 1941.
The pertinent provisions of the will read as follows :
‘£ Second: I give and bequeath to my sister Henrietta Martz, and unto her heirs and assigns forever, the sum of $5,000, as recognition of the sacrifice she made in the loan to our sister, Emma Nagel.
££Third: All the rest, residue and remainder of my" estate, real, personal and mixed, of whatever nature and wheresoever situated, which I may own or have the right to dispose of at the time of my decease, I give, devise and bequeath as follows:
“(A) To my brother, Albert A. Martz, a one-fourth part‘and, share thereof and unto his heirs and assigns forever.
“(B) To my sister, Eva M. Willette, a onefourtlx part and share thereof, and nnto her heirs and assigns forever.
“ (C)' To my sister, Henrietta Martz, a one-fourth part and share thereof and unto her heirs and assigns forever.
“(D) To my nieces and nephew, G-retchen Ross, Dorothy Nagel and William A. Nagel, children of my deceased sister, Emma Nagel, each a one-twelfth part and share thereof and unto their heirs and assigns forever.
“Fourth: I have intentionally omitted from this my last will and testament my daughter Margaret Martz Heineman,' having’ already made ample provision for her by a trust agreement now in effect.”
Testator was survived by the following persons: Albert A. Martz, a brother; Eva M. Willette, a sister; Gretchen Ross, Dorothy Nagel and William A. Nagel, children of Emma Nagel, testator’s deceased sister; Elsie Hoff Thiermann, daughter of Matilda Hoff, a deceased sister; Clara K. Conte, daughter of Abbie Krapp, a deceased sister; and Margaret Martz Heineman, deceased’s adopted daughter. Henrietta Martz, the sister mentioned in the above provisions of the will, predeceased the testator by eight days, leaving no issue.
The trial court entered an order providing:
“2. That the specific legacy of $5,000 bequeathed to Henrietta Martz, sister of said deceased, by paragraph second of the will, lapsed by reason of her death-prior to testator, and becomes and is a part-of the residuary estate.
“3. That the specific bequest to Henrietta Martz, sister of said deceased, by subparagraph (c) of paragraph third of the last will and testament, of a one-fourth part and share of the residuary estate, lapsed by reason of her death prior to testator, and thereby became and is intestate property descending to the heir at law of said deceased in accordance with the statutes of descent and distribution.
“4. That Margaret Heinem'an, the daughter of said deceased, is determined to be his sole heir at law, and thereby inherits and is entitled to the one-fourth part of the residuary estate bequeathed to Henrietta Martz.”
In the opinion of the trial court, it is stated:
“The wording of the residuary clause seems to negative any intention to treat the residuary legatees as a class, and the children of two- other deceased sisters are omitted.
“There does not appear, from the fact of this instrument itself, sufficient expression of intent on the part of the testator to justify the court in surmising that he would want any lapsed one-quarter or one-twelfth to go to the 'surviving residuary legatees. * * * . ' .
‘ ‘ The words of the fourth clause in question seem to be merely explanatory of testator’s action, and are not directive or mandatory in nature, as thóy so easily could have been made had the testator so intended. * * *
“The same ruling should apply to the legacy set up in the second paragraph of the will,- and said legacy held to be lapsed, and disposed of as intestate property. The wording of this paragraph would not justify the court in determining the testator intended it as a -payment of a legal or even moral obligation, but a more natural interpretation would be that he intended it as a mere bounty or reward for an act of kindness.”
Appellants appeal and urge:
“(1) That the court erred in determining that the specific bequest made in the second paragraph of the will of George Martz, deceased, became intestate property.-
“(2) That the court erred in determining that the bequest made to Henrietta Martz in the third paragraph of the will of George Martz, deceased, became intestate property.
“(3) That the court erred in determining that the said specific bequest descended to Margaret Martz Heineman.
“(4)- That the court erred in determining that the said Margaret Martz Heineman is the sole heir of the deceased.
“(5) That the court erred in determining that the said Margaret Martz Heineman is entitled to any share of the estate of the deceased.”
It is the position and claim of appellee, Margaret Martz Heineman, daughter and sole heir at law of said deceased, that the legacy to Henrietta Martz provided in the second clause of the will lapsed at her death and became part of the residue of said estate, and, also, that the bequest of one-fourth of the residue of said estate in paragraph (C) of-the third clause of the will to Henrietta Martz lapsed by reason of her death prior to the death of testator, and, thére being no provision in the will covering that eventuality, it became intestate property, which, under the law, passed to the<heir at law of the deceased, Margaret Martz Heineman.
It is the position and claim of appellants that the share of the estate given to the person who predeceased the testator passes to the heirs of that person. It should be noted in the case at bar that the specific and residuary legacies use the following-words : ‘ ‘ and unto her heirs and assigns forever. ’ ’
In re Spier’s Estate, 224 Mich. 658, one Alice B. Spier died leaving a last will and testament in which she bequeathed certain real estate tq her husband James P. Spier “and to his heirs and assigns forever.” The husband pfedeceased testatrix by more than 18 months, but she did not alter her will thereafter. In construing testatrix’ will we said:
“The use of the words ‘heirs and assigns/ following a devise or bequest as here made, has, we think, uniformly been held to define the estate given or granted, and not to designate the .persons who should take by way of remainder unless an intent to create a life estate clearly appeared. * ’ * *
“We feel -constrained to hold that the provision for the husband in the second paragraph of the will lapsed.” *
See, also, 78 A. L. R. 992; 128 A. L. R. 94; and 4 Page on Wills (3d Ed.), § 1420.
We are constrained to hold that the use of the words “and unto- her heirs and assigns fo'rever” did not prevent a lapse of the legacy.
Appellants also urge that the residuary legatees and devisees constitute a natural class, being the brothers and sisters of deceased, and rely upon In re Ives’ Estate, 182 Mich. 699, in support of their position. We there said:
“We are of opinion that the following* claim of appellants is supported by the weight of authority:
“‘Where it is evident■ from the whole'tenor of the will that testator, in making the gift of an aggregate sum to certain relatives, intended to provide for them collectively as a class, the designation of each individual by name, or the use of distributive words, or words denoting equality, will not be held to make the gift operate -as a gift of a separate interest to .each individual named, which would lapse by his death before the testator.’ ”
And held that the legatees, being the brothers and sister of deceased, constituted a natural and complete class.
Appellees rely upon Cattell v. Evans, 301 Mich. 708. In that case Evans executed a will. A bequest of $35 was made to hi» son Earl and a like bequest was made to his daughter Meta, The residue of his estate was' to go to' seven named persons, including Mrs. Evans who predeceased the testator. Subsequently, Evans erased the name of one of the residuary legatees from his will and drew a line through the names of two others. The three remaining legatees took the position that they were entitled as members of a class to the lapsed and revoked legacies to the exclusion of Evans’ son and daughter and any other heirs at law. We there said:
“Plaintiffs in the instant case do not form a natural class in that they possess no common attrh bute other than that of being legatees. Though this is not conclusive, the absence of a common attribute militates against construing the residue as a class gift. * * *
“The-residuary legatees were specifically designated by name, no words of survivorship were used, and there is no indication on the face of the will that the testator intended to make a class gift. The naming of 'the residuary legatees and the absence of the survivorship language indicate an intention not to make a class gift.”
We do not think the Ives Case is controlling. In that case the legatees were all the brothers 'and a sister of the deceased. In the case at bar there is no complete class. Some of the legatees are a brother and sisters, some nieces and nephews, and another niece and nephew were not mentioned in the will. Moreover no words of survivorship appear in the will, nor is there any provision indicating what the testator desired should any of the named legatees predecease him.
In coming to our conclusion in this case we have in mind that testator failed to provide for the contingency that presently exists. In re Coots’ Estate, 253 Mich. 208, the residuary bequests were to named persons. The will devised a life estate in trust to testator’s wife and son William who survived his mother and died without issue or lineal heirs. The will provided:
“(c) In case my said son shall die without leaving issue or lineal heirs, I direct that all of the rest, residue, and remainder of said property and estate, after the payment of said sum of ten thousand dollars, ($10,000) to the widow of my said son, shall be divided equally among William J. Coots, son of my-brother John, Nellie L. Coots Daly, daughter of my brother John; Walter M.'Coots, son of my deceased brother Charles; Arthur J. Oldfield, George C. Oldfield, Walter J. Oldfield and Gertie Oldfield, children of my sister Hannah, in equal shares. ’ ’
We there said:
‘ ‘ The question is whether the shares of the residue devised to the deceased Coots niece and nephews passed to their respective heirs, devisees and assigns, became intestate property going to testator’s heirs, or devolved upon the four Oldfields as survivors of a class or as residuary legatees.
“Testator intended the distribution as set out to be the last expression of -his will, upon the hypothesis or hope that all remaindermen would take personally, as no provision was made for the contingency of any of them failing- to survive the wife and son. By failing to provide for such contingency, testator must be deemed to have intended that, future eventualities which would change the plan as written should be taken care of by the law. The contention that-testator intended to keep the property within the group of remaindermen and that the survivors of them would take the whole estate is not supported by the language or scheme of the will and is contrary to the plainly intended equality and finality of division. The will evidences no intention to treat the nephews and nieces as a class, with rights of survivorship, and, as they were named and described specifically and no open end was left to eject any of those designated or to admit others, they did not take as a class. In re Ives’ Estate, 182 Mich. 699; Wessborg v. Merrill, 195 Mich. 556 (L. R. A. 1918 E. 1074); In re Hunter’s Estate, 212 Mich. 380. * * *
“But a lapsed or ineffectual legacy or devise of a portion of the residuary estate itself, where the legatees, or devisees take in common, does not inure to the benefit of the survivors, but the interest of the deceased becomes intestate estate and passes to the next of kin or heirs at law of the testator. (Citing cases.) The shares of residue represented by the three Coots children, who predeceased William, became intestate property and are to be distributed as such to the heirs at law of the testator. ” . •
We conclude that the legacy in the residuary clause of the will to Henrietta Martz lapsed and became intestate property and as such isHo be distributed to.testator’s heirs at law.
Appellants also urge that the will disinherits the adopted daughter apd rely upon the Ives Case in support of such claim. In that case the specific bequest reads as follows:
“Pour and one-half: I give, devise and bequeath unto my adopted daughter, Helen H. Ives, the sum of ten thousand dollars, to be paid out of my estate at the time of the final settlement thereof: Provided, however, that-this bequest is made upon the express condition that my said daughter shall not contest or oppose the probate and administration of my said will, or -procure any person to contest the same, or.aid in any manner in contesting said will, or in preventing the same being probated and carried out. And in case of any such act or acts on the part of my said adopted daughter, then the provision above mentioned in her behalf shall be null and void, and the sum of ten thousand dollars above' mentioned shall be distributed according to the provision of said will as it existed prior to the making of this codicil.”
We there said:
“An examination of the will and codicil satisfies us that it was the intention of the testatrix to give to her adopted daughter only the sum of $10,000 upon the terms stated, and to give to her brothers and sister the residue of her property. Not only do the instruments when read together indicate this, but the family history and undisputed circumstances all point in the same direction. The fact that she did not change her will after the death of her sister, Mrs. Butterfield, is a significant circumstance. ’ ’
Appellee relies upon Cattell v. Evans, supra, in support of. her theory that the language used in paragraph four of the will does not disinherit the adopted daughter. In the Cattell Case the testator made a bequest of $35 to his son and a like bequest to his daughter. The will also provided:
“I give nothing, except the two legacies above provided for, to the immediate members of my family because in the separation from my wife I paid a large sum which I feel is all they are entitled to out of my estate.”
We there said:
“The language in the Evans will does not expressly state that testator’s son and daughter shall not take intestate property as heirs, and such a conclusion is not necessarily implied by the language of the will. The language used by the testator appears to be merely explanatory. At the time the will was executed it is clear the testator intended that all of his property should pass by operation of his will and therefore did not contemplate leaving any intestate property.”
In our opinion the language used in the case at bar is explanatory of testator’s reasons for not further providing for his adopted daughter. It cannot be inferred from the language used that testator intended that his adopted daughter could not inherit in the event that a contingency arose such as did arise in this case. The language does not expressly 'or by necessary implication disinherit -the daughter and she is, therefore, entitled to the intestate property. Other questions have been raised, but in view of our conclusions in this matter, they do not require discussion or decision.
The order of the trial court is affirmed, with costs to appellee.
Carr, C. J., and Butzel, Bushnell, Boyles, Reid, North, and Dethmers, ■ JJ., concurred. | [
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Butzel, C. J.
Defendant, an independent dealer operating a gasoline station in the city of Detroit, was convicted of violation of Act No. 282, Pub. Acts 1937 (Comp. Laws Supp. 1937, § 9829-11 et seq., Stat. Ann. 1938 Cum. Supp. § 28.78[1] et seq.). The particular offense charged was that on the sale of five gallons of gasoline at 18.6 cents per gallon, a price at least equal to that generally prevailing, lie gave away, as a premium to a cash customer, a drinking glass worth less than five cents, with the intention of injuring or destroying his competitors.
Act No. 282, Pub. Acts 1937, is entitled:
“An act to prevent unfair discrimination, unfair methods of competition and destructive trade practices in the production, manufacture, distribution or sale of bakery products or petroleum products; to provide civil remedies and proceedings for the enforcement of this act; to define the duties of the attorney general with regard thereto; and to provide penalties for the violation of this act.”
Section 6 of the act provides:
“Any person, doing business in this State and engaged in the production, manufacture, distribution or sale of bakery products or petroleum products, who shall, with the intent to injure or destroy a competitor, give, offer to give or advertise the intent to give away any commodity for the purpose of promoting the sale of any other commodity, shall be deemed guilty of a destructive trade practice, which is hereby prohibited and declared to be unlawful. ’ ’
At the trial, it was shown by the prosecution that defendant had issued circulars advertising the giving of a premium, and that the regular customers of some other dealers had made purchases from defendant in order to secure premiums; that the market for the sale of gasoline at retail is a limited one so that only an amount certain is sold; that the giving of a premium, while amounting to a reduction in the retail price, does not result in an increase in the total amount of gasoline consumed; and that an increase of business at one station results in a loss of business by competing stations, with consequent injury to the latter.
Defendant testified that he purchased the gasoline of the specifications he required at the lowest price for which he could obtain it and from whatever source he could secure it on the open market. It was shown that he did not have the benefit of the wide advertising enjoyed by the dealers in nationally known brands, who, by means of radio, magazines and newspapers, claimed superior merit for their products; and that in order to offset such advantages, he gave away premiums. Attention was called to the fact that large stations handling well known brands provide rest rooms with modern facilities, and furnish, without charge, the services of attendants who clean customers ’ windshields, fill radiators and batteries with water and tires with air, thus giving them, at some expense, something in addition to gasoline for the price of the latter. Defendant testified that he gave premiums solely for the purpose of promoting sales in order to make a livelihood and that he had no intention of injuring or destroying a competitor.
Defendant moved that the information be quashed and also that a verdict of not guilty be directed on the grounds that the act was unconstitutional, and that the intent to injure or destroy a competitor had not been proved beyond a reasonable doubt. The judge, who tried the case without a jury, denied the motion and found defendant guilty. The latter appeals.
While it is the province of the jury, or the judge acting as a jury, to determine the intent from all of the surrounding facts, can it be said from the evidence that the giving away of a glass worth less than five cents, under the circumstances, shows beyond a reasonable doubt an intent to injure or destroy a competitor? Merely to ask the question almost calls for the answer, “Ño,” but we prefer to base o-ur opinion on broader grounds inasmuch as other cases have arisen throughout the State and a determination of the constitutionality of this section of the law is highly desirable.
Defendant assails the constitutionality of section 6 of the act, under which he was convicted, and also the constitutionality of the act as a whole. We are mindful of the fact that the constitutionality of an act will be presumed until the contrary is shown, and that an entire statute will not be declared unconstitutional because one part is void, if the balance of the act will be effective. The act itself contains a severability clause so often found in recent legislative enactments. We shall, therefore, but briefly refer to the nature of the statute as a whole and limit our main discussion to section 6.
While the purpose of the act may be to prevent the creation of a monopoly by one dealer who seeks to drive out all of his competitors by means of unfair and ruinous competitive practices, to the detriment of the public, nevertheless, the act does savor of an attempt to stifle competition by maintaining the prices and profits of those dealers already in the business. Defendant claims that the act is a price-fixing measure and relies on Williams v. Standard Oil Co. of Louisiana, 278 U. S. 235 (49 Sup. Ct. 115, 60 A. L. R. 596), which held that the business of selling gasoline was not affected with a public interest so as to permit statutory regulation of retail prices. The prosecution contends, on the other hand, that the statute is not a price-fixing measure, but merely prohibits certain unfair trade practices. In view of our decision as to the validity of section 6, it is unnecessary to decide the question, and in our discussion of that section, we shall assume that the act is not a price-fixing measure, but is solely prohibitive of allegedly unfair trade practices, as contended by the prosecution.
Defendant claims that Act No. 282, § 6, Pnb. Acts 1937, is unconstitutional because it results in a deprivation of property and liberty without due process of law, the prohibition of the giving of premiums being outside of the police power.
The right to engage in any business not harmful to the public is v guaranteed by the Constitution. Carolene Products Co. v. Thomson, 276 Mich. 172. Consequently, if the giving of a premium with the sale of gasoline is a legitimate business practice, with no detrimental effects to the public health, morals, safety and general welfare, the practice may not be prohibited by the legislature and a statute doing so results in a deprivation of property and liberty without due process of law. On the other hand, it is clear that any business or business practice may be regulated if such regulation is necessary to the public welfare, health, morals and safety. Carolene Products Co. v. Thomson, supra; Nebbia v. New York, 291 U. S. 502 (54 Sup. Ct. 505, 89 A. L. R. 1469); Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U. S. 412 (57 Sup. Ct. 772, 112 A. L. R. 293).
Many cases have held that the giving of premiums or trading stamps with the purchase of commodities is a legitimate business practice which is protected by the due process clause. Long v. State; 74 Md. 565 (22 Atl. 4, 12 L. R. A. 425, 28 Am. St. Rep. 268); In re Opinion of the Justices to the House of Representatives, 208 Mass. 607 (94 N. E. 848); People v. Gillson, 109 N. Y. 389 (17 N. E. 343, 4 Am. St. Rep. 465); State v. Caspare, 115 Md. 7 (80 Atl. 606); State v. Dalton, 22 R. I. 77 (46 Atl. 234, 48 L. R. A 775, 84 Am. St. Rep. 818); State v. Ramseyer, 73 N. H. 31 (58 Atl. 958, 6 Ann. Cas. 445); State v. Lothrops-Farnham Co., Inc., 84 N. H. 322 (150 Atl. 551); State v. Dodge, 76 Vt. 197 (56 Atl. 983, 1 Ann. Cas. 47); O’Keeffe v. City of Somerville, 190 Mass. 110 (76 N. E. 457, 112 Am. St. Rep. 316, 5 Ann. Cas. 684); In re Opinion of Justices to the Senate, 226 Mass. 613 (115 N. E. 978); State, ex rel. Simpson, v. Sperry & Hutchinson Co., 110 Minn. 378 (126 N. W. 120, 30 L. R. A. [N. S.] 966); Ex parte McKenna, 126 Cal. 429 (58 Pac. 916); Ex parte Drexel, 147 Cal. 763 (82 Pac. 429, 2 L. R. A. [N. S.] 588, 3 Ann. Cas. 878); City and County of Denver v. Frueauff, 39 Col. 20 (88 Pac. 389, 7 L. R. A. [N. S.] 1131, 12 Ann. Cas. 521); Denver v. United Cigar Stores Co., 68 Col. 363 (189 Pac. 848); United Cigar Stores Co. vb. People, 68 Col. 546 (190 Pac. 1117); Young v. Commonwealth, 101 Va. 853 (45 S. E. 327); City Council of Montgomery v. Kelly, 142 Ala. 552 (38 South. 67, 70 L. R. A. 209, 110 Am. St. Rep. 43); State, ex rel. Hartigan, v. Sperry & Hutchinson Co., 94 Neb. 785 (144 N. W. 795, 49 L. R. A. [N. S.] 1123); Sperry & Hutchinson Co. v. City of Owensboro, 151 Ky. 389 (151 S. W. 932, Ann. Cas. 1915A, 373); People, ex rel. Appel, v. Zimmerman, 102 App. Div. 103 (92 N. Y. Snpp. 497); People, ex rel. Madden, v. Dycker, 72 App. Div. 308 (76 N. Y. Snpp. 111). However, the Supreme Court of the United States has held that the giving of premiums or trading stamps with the purchase of merchandise is subject to prohibition by the legislature under the police power. Rast v. Van Deman & Lewis Co., 240 U. S. 342 (36 Sup. Ct. 370, L. R. A. 1917A, 421, Ann. Cas. 1917B, 455); Tanner v. Little, 240 U. S. 369 (36 Sup. Ct. 379); Pitney v. Washington, 240 U. S. 387 (36 Sup. Ct. 385). In the case of People, ex rel. Attorney General, v. Sperry & Hutchinson Co., 197 Mich. 532 (L. R. A. 1918A, 797), quo warranto proceedings were brought to oust the defendant trading stamp company from doing business in Michigan in violation of the provisions of Act No. 244, Pub. Act 1911 (3 Comp. Laws 1915, § 15055, et seq.). That statute prohibited the giving of trading stamps other than for redemption directly by the firm issuing them. The holding of the United States supreme court in Rast v. Van Deman & Lewis Co., supra, and its companion cases was conceded for the purposes of the opinion, the Michigan statute being declared invalid on other grounds. The validity of a statute such as is here involved was not determined.
Although the United States supreme court has held that a State statute prohibiting the giving of trading stamps does not violate the Fourteenth Amendment of the Federal Constitution, article 2, § 16, of the Michigan Constitution is also a limitation on the power of the State Legislature. And while the Federal supreme court is the final judge of violations of the Federal Constitution, the decision of the Supreme Court of this State is final on the question of whether or not a State statute conflicts with the State Constitution. In the cases of In re Opinion of the Justices to the Senate, 226 Mass. 613 (115 N. E. 978) and State v. Lothrops-Farnham Co., supra, the supreme courts of Massachusetts and New Hampshire refused to follow the decisions of the United States supreme court and held that the giving of trading stamps could not be prohibited. While the decisions of the Federal court are of weight and should be considered, this court is nevertheless free to determine for itself whether or not Act No. 282, § 6, Pub. Acts 1937, violates article 2, § 16 of the Michigan Constitution.
The mere fact that the legislature labels the giving of a premium with the sale of gasoline a ‘ ‘ destructive trade practice, ’ ’ does not make it such nor render the practice subject to prohibition. While there is a. presumption that an act of the legislature is valid, nevertheless, the courts have the power to determine whether, as a matter of fact, the prohibition bears a reasonable relationship to the public health, safety, morals and general welfare. Carolene Products Co. v. Thomson, supra.
There is no claim that the giving of a water glass with five gallons of gasoline constitutes a lottery or any form of gambling. The prosecution attempted to show that a dealer who gives a premium is more inclined, for that reason, to adulterate his product or to give short measure. No evidence was introduced to prove the contention and there is no logical connection between the practice of giving a premium and a tendency to defraud the public. Nor is there any showing that the public is deceived into buying inferior gasoline by the offering of a premium. If any dealer sells inferior gasoline, his customers will discover the fact at once, premium or no premium, and the dealers handling nationally known brands will retain their business not only through their advertising, but by selling a meritorious and satisfactory product. The case of Seifert v. Buhl Optical Co., 276 Mich. 692, may be distinguished on the ground that the health and eyesight of the public was involved and that the means of advertising used would likely have led to acceptance of detrimentally inferior professional services.
The United States supreme court predicated its decision in Rast v. Van Deman & Lewis Co., supra, on the finding that the giving of premiums might be a “lure to improvidence,” and for that reason could be prohibited in protection of the public. However, the prosecution contends that the market for the retail sale of gasoline is inelastic and that the giving of premiums will not cause motorists to buy more gasoline, bnt will merely canse them to transfer tbeir trade to the dealer who offers premiums. Since motorists buy only as much gasoline as they need, regardless of inducements, there clearly can be no ‘ ‘ lure to improvidence. ’ ’
The prosecution finally contends that the giving of premiums by one dealer provokes a contest between all dealers to give larger and more valuable premiums or to cut prices, and that such a price war demoralizes the industry, to the consequent injury of the public. It is claimed that a price war may result in violence and lawlessness, with injury to person and property. This may be prevented by proper performance of their duties on the part of police and prosecutor. Nor are we impressed with the claim by the prosecution that because ambulances, police patrols and other vehicles in public service use gasoline, the giving of premiums should be prohibited. However, a price war does tend to have undesirable results, and assuming, but not deciding, that a tendency towards a price war might be a basis of valid regulation of retail gasoline sales by the legislature, it does not follow that enforcement of section 6 of the statute will have the effect of preventing such price wars.
In order that destructive competition by cutting prices might be eliminated, it would be necessary that some minimum price be fixed, below which a dealer may not sell gasoline. If, as the prosecution claims, the statute makes no attempt to set a fixed minimum price equally applicable to all dealers without regard to particular circumstances, then defendant could sell his gasoline at 20 cents a gallon or at 14.6 cents, and not violate the act, as long as he does not give a premium or sell below cost. If defendant may legally sell his gasoline at 14.6 cents a gallon, without giving a premium, the tendency towards a price war would be no less than it was when he sold at 18.6 cents a gallon and gave a premium worth a fraction of a cent a gallon. It is obvious that if we assume that the act is not a price-fixing measure, we must conclude that the aim of the legislature in enacting the statute was not to prevent price wars. Any tendency that the giving of premiums might have towards promoting a price war is not an evil sought to be eliminated by the legislature. '
It is true that only those practices which are entered into “with the intent to injure or destroy a competitor” are prohibited. However, any form of competition tends to take trade away from other dealers with a natural injury to their businesses. The mere entry of an additional tradesman or professional man into a community where he secures a part of a limited amount of business is injurious to all competitors. Surely there cannot be anything unlawful about competition if no unfair practices are followed. Until the legislature sees fit to eliminate all competition between retail gasoline dealers, the mere fact that one dealer manages to take trade away from his rivals in business cannot be held to be a detrimental practice. Some impropriety in his means of accomplishing this result must be shown. What is the impropriety in giving a premium? It is not a form of gambling, nor a “lure to improvidence,” and it will not lead to fraud. By giving a premium, defendant was merely offering the purchasing public more for its money. Surely there is nothing reprehensible in that. It is apparent that the giving of a premium has no evil effects which the legislature has sought to correct. It must be held that since the legislature permits competition between retail gasoline dealers, the giving of a premium is a legitimate trade practice.
There is no reasonable relationship between the prohibition of the giving of a premium and the protection of the public health, morals, safety and welfare. Therefore, Act No. 282, § 6, Pub. Acts 1937, as applied to the retail sale of gasoline, is unconstitutional as a violation of article 2, § 16, of the Michigan Constitution.
The conviction is reversed, and defendant is ordered discharged.
Wiest, Sharpe, Chandler, and North, JJ., concurred with Btjtzel, C. J. | [
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Potter, J.
This is an action in assumpsit brought by plaintiff against defendant to recover the balance claimed to be due upon a promissory note. The note sued upon was, when given, secured by a mortgage on Chicago real estate. The mortgage securing the note was foreclosed in chancery in Illinois and the mortgaged property sold to satisfy the mortgage. There was no personal service of process upon defendant in the Illinois suit to foreclose the mortgage. There was substituted service upon defendant by an order of publication made by the Illinois court and duly published. The mortgaged property sold in Illinois pursuant to the decree of the court there made brought less than the amount of the note sued upon. Plaintiff seeks to recover in this suit an amount arrived at by deducting from the total amount due upon the note, both principal and interest, the amount realized from the sale of the mortgaged property, less costs. •
Defendant admits giving the note and mortgage sued upon but claims he sold the mortgaged property in June, 1927; that the trustees of the mortgage had, for a valuable consideration, extended the time of payment to the subsequent purchasers of the property; that no demand was made upon him for payment for a period of nine years; that no process was served upon him in the foreclosure case; that he did not enter his appearance in the Illinois court in the foreclosure proceeding; that the mortgaged property was worth much more than the amount due upon the note and mortgage; that it was worth at least $50,000 and was sold for $18,000, a price so inadequate as to shock the conscience of the court; and that plaintiff and his predecessors in title to the mortgage, note were guilty of fraud and deceit, laches, and bad faith, to defendant’s injury, and should be estopped from obtaining judgment.
The Illinois property was purchased by the holder of the mortgage. The case was tried before the court without a jury. There was ample evidence to sustain defendant’s claim of the value of the property and its sale for an inadequate price, and there was proof to show that the predecessors in title of the plaintiff in the Illinois court, and plaintiff here, extended the time of payment to the subsequent owners of the real estate. This testimony was not disputed. The trial court held, for both reasons claimed by defendant, plaintiff could not recover.
It is claimed that where there is a sale of the mortgaged real estate under a chancery decree regularly made and entered, and the report thereof confirmed, there is a judicial determination upon which a suit like that at bar may be predicated to recover the balance due, and that unless the sale is set aside, there is no defense to an action at law. It will be conceded that if the Illinois court in chancery in the foreclosure proceedings had acquired jurisdiction of the subject matter and of the parties, this would have been so, because the defendant would have been bound to make any defense which he had in the foreclosure proceedings, and, having had an opportunity to litigate the question, the foreclosure proceedings, if regular, would have been conclusive upon him in this suit. It would have been sufficient to say the questions might have been raised and litigated. Bond v. Markstrum, 102 Mich. 11. That is not this case.
The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in every other forum, as has been said, an illegitimate assumption of power. D’Arcy v. Ketchum, 11 How. (52 U. S.) 165; Pennoyer v. Neff, 95 U. S. 714.
Many of the States prior to the adoption of the Constitution passed laws discriminating against the people of other States and providing, among other things, that nonresidents could not institute a suit therein. This was true in Massachusetts, and in Connecticut; and as late as March, 1787, the legislature of Rhode Island passed an act excluding citizens of Connecticut from the benefit of the laws of Rhode Island, and thereupon Connecticut passed a law excluding the citizens of Rhode Island from the right to sue in the courts of Connecticut. Warren, The Supreme Court and Sovereign States, p. 133. These principles which governed prior to the adoption of the Constitution were intended to be changed thereby.
Article 4, § 2, of the Constitution of the United States provides that the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.
Article 4, § 1, provides that full faith and credit shall be given in each State to the public acts, records and judicial proceedings of every other State.
Article 5 of the amendments to the Constitution of the United States provides that no person shall be deprived of life, liberty or property without due process of law.
Article 14, § 1, of the amendments to the Constitution provides that no State shall deprive any person of life, liberty or property without due process of law.
One of the effects of these various constitutional provisions and amendments is to give to the citizens of any State the right to sue in the courts of this State upon the sazne terms as citizens of this State may sue.
A plaintiff resident in this State may not institute and maintain a suit for the unpaid balance of a real estate mortgage note after a Michigan decree foreclosing the mortgage securing the same, unless authorized so to do by the court. 3 Comp. Laws 1929, § 14367 (Stat. Ann. § 27.1135).
If plaintiff herein may maintain a suit in this State for an unpaid balance claimed to be due upon the note in question without being authorized so to do by any court, he, as a nonresident plaintiff, may exercise a privilege and power denied by statute to residents of this State who may seek to sue to recover a deficiency judgment on a mortgage note after foreclosure decree in this State. It was once said that “ye shall have one manner of law, as well for the stranger, as for one of your own country.” Leviticus, 24:22. Though this is still the rule, we find it unnecessary to decide whether compliance with the statute above cited prescribed by the lex fori was necessary, and, if so, how it should be complied with, for in Goodrich v. White, 39 Mich. 489, it was held this statute was waived by defendant not moving to stay the proceedings and in going to trial, as was done in this case.
Passing this question, any judgment or decree which might have been rendered in the State of Illinois could have no binding effect upon the defendant personally. Pennoyer v. Neff, supra. The doctrine of full faith and credit.was not designed to displace the principle of natural justice which requires a person to have notice of a suit before he can be conclusively bound by the result, nor those rules of public law which protect persons and property within one State from the exercise of jurisdiction over them by another. Lafayette Insurance Co. v. French, 18 How. (59 U. S.) 404; Pennoyer v. Neff, supra. To give such proceedings any validity, there must be a tribunal competent by its Constitution, that is, by the law of its creation, to pass upon the subject matter of the suit, and if that involves a determination of the personal liability of the defendant, he must be brought within its jurisdiction by service of process within the State or by his voluntary appearance. Pennoyer v. Neff, supra. A foreign judgment, to be valid and enforceable, must have been rendered on a service of process which is the due process of law within the Federal Constitution. A judgment recovered in another State will not be accorded recognition as a valid and binding adjudication unless there was actual personal service on defendant or a voluntary appearance by defendant. Baker v. Baker, Eccles & Co., 242 U. S. 394 (37 Sup. Ct. 152). Such a judgment has no extraterritorial force or validity whatsoever as a personal judgment against the defendant and may not, therefore, be pleaded against him in the courts of his domicile as an adjudication of the same subject matter. Pennoyer v. Neff, supra; Galpin v. Page, 18 Wall. (85 U. S.) 350; Cooper v. Reynolds, 10 Wall. (77 U. S.) 308; Green v. Van Buskirk, 7 Wall. (74 U. S.) 139.
To secure personal jurisdiction over nonresidents, a personal service beyond the limits of 'the State is equally ineffective as is constructive service by publication. The process of a court runs legally only within the limits of its jurisdiction and it is only by service made within those limits that a right to recognize a personal judgment against a nonresident without his consent is acquired. Sugg v. Thornton, 132 U. S. 524 (10 Sup. Ct. 163); De La Montanya v. Be La Montanya, 112 Cal. 101 (44 Pac. 345, 32 L. R. A. 82, 53 Am. St. Rep. 165); Atherton v. Atherton, 181 U. S. 155 (21 Sup. Ct. 544); McGehee, Due Process of Law, p. 92. The same rule obtains in a proceeding quasi in rem as to the validity of a personal judgment attempting to determine the obligations of the defendant except as to the disposition of the res. Freeman v. Alderson, 119 U. S. 185 (7 Sup. Ct. 165); Boswell v. Otis, 9 How. (50 U. S.) 336.
A proceeding in rem is one taken directly against property and has for its object the disposition of the property without reference to the title of individual claimants. But in a larger and more general sense, the terms are applied to acts between parties where the direct object is to reach and dispose of property owned by them or of some interest therein. Such are cases commenced by attachment against the property of debtors, or instituted to partition real estate, foreclose a mortgage, or enforce a lien. So far as they affect property in the State, they are substantially proceedings in rem in the broader sense which we have mentioned. Pennoyer v. Neff, supra; Grannis v. Ordean, 234 U. S. 385 (34 Sup. Ct. 779). There is no question but that a State, through its courts, may proceed to a final decree respecting the ownership of lands within its limits upon constructive notice to defendants who reside beyond the reach of process. But that gives it no authority to do more than to enforce the judgment against the property within the jurisdiction of the court. Pennoyer v. Neff, supra; Huling v. Railway, 130 U. S. 559 (9 Sup. Ct. 603); Arndt v. Griggs, 134 U. S. 316 (10 Sup. Ct. 557); Roller v. Holly, 176 U. S. 398 (20 Sup. Ct. 410); Grannis v. Ordean, supra.
The constitutional provision for giving full faith and credit to the judicial proceedings of other States relates only to the effect of such proceedings as evidence or as a bar to further litigation. Chicago & Alton R. Co. v. Wiggins Ferry Co., 108 U. S. 18 (1 Sup. Ct. 614); M’Elmoyle v. Cohen, 13 Pet. (38 U. S.) 312; 34 C. J. p. 1137.
“Those provisions establish a rule of evidence, rather than of jurisdiction.” Wisconsin v. Pelican Ins. Co., 127 U. S. 265, 291 (8 Sup. Ct. 1370).
“The Constitution did not mean to confer any new power on the States, but simply to regulate the effect 'of their acknowledged jurisdiction over persons and things within their territory. It did not make the judgments of the States domestic judgments to all intents and purposes, but only gave a general validity, faith and credit to them as evidence.” Cole v. Cunningham, 133 U. S. 107 (10 Sup. Ct. 269).
In order to proceed for the collection of a judgment recovered in another State, the creditor must first sue upon it in the State where he wishes to enforce it and recover a judgment upon it. Cole v. Cunningham, supra; Wisconsin v. Pelican Ins. Co., supra; M’Elmoyle v. Cohen, supra.
The decree of the Illinois chancery court and the proceedings had thereunder to sell the real estate were, so far as this record shows, valid and binding upon the 'res real estate, but have no binding force and effect upon the defendant personally because there was no personal service of process upon him within the jurisdiction of the Illinois court and no personal appearance by him or his attorney in those proceedings. The records of such judicial proceedings are, so far as the defendant’s personal liability is concerned, of no force and effect. 34 C. J. pp. 1137-1140, and cases cited.
Plaintiff claims defendant had actual knowledge of the pendency of the suit to foreclose the mortgage in Illinois and is, therefore and thereby, estopped from making the defense set up in this case to plaintiff’s action on the note. Though the defendant may have had full knowledge of the pendency of the foreclosure proceedings in Illinois, he could stand upon his legal rights and not appear and subject himself to the jurisdiction of the Illinois court. Not having been served with process and not having appeared in person or by attorney, neither the statutes of Illinois nor the decree of the court or the proceedings had thereunder are binding upon the defendant personally or establish his personal liability or the amount due upon the promissory note sued upon. No personal decree for deficiency binding upon the defendant could have been made by the Illinois court, nor could the facts constituting the indisputable basis of personal liability upon the mortgage note, be irrevocably fixed under the circumstances by the decree of the Illinois court and the proceedings for the sale of the property and the sale thereof thereunder. The right of defendant to resist personal liability upon the mortgage note could not be adjudicated in proceedings in which no jurisdiction was acquired over him personally by service of process within the jurisdiction of the court or by his appearance in the chancery proceedings by person or by attorney. The subject of defendant’s personal liability upon the promissory note and the extent thereof was properly cognizable by the circuit court of Ottawa county. Defendant had sold the mortgaged property long before foreclosure proceedings were commenced.
In Fenton v. Torrey (syllabus), 133 Mass. 138, it was held:
“A mortgagor, who has conveyed his equity of redemption, but remains personally liable upon the mortgage note, and who has been compelled to pay the balance due thereon, after the proceeds of a sale by the mortgagee under the power of sale contained in the mortgage have been applied upon the note, may maintain an action against the mortgagee for misconduct in conducting the sale, by reason of which a smaller sum was obtained than otherwise would have been. ’ ’
And in Boutelle v. Carpenter, 182 Mass. 417 (65 N. E. 799), it was said:
“In an action upon a mortgage note to recover the balance due after a foreclosure sale where the mortgagors were not the owners of the equity at the time of the sale we think that it is open to the makers of the note to show, as bearing upon the amount due, that the sale was not conducted as it should have been, and that more should have been realized, especially if the holder of the mortgage was himself the purchaser. Unless the makers of the note can do that they would seem to be without a remedy. In the present case the issue whether the sale was propérly conducted was raised by the pleadings, and evidence in regard to it was therefore admissible. * * * We think that it was competent for the judge to con sider whether the sale was properly conducted and that the evidence was admissible under the pleadings.”
The rule is thus stated in 3 Jones on Mortgages (8th Ed.), p. 18, § 1583:
“In a suit for deficiency against a mortgagor who was not the owner of the equity of redemption at the time of the foreclosure sale, he can show that the sale was not properly conducted, and that a higher price should have been obtained for the property, especially if the holder of the mortgage was the purchaser. ’ ’
“In an action upon a mortgage note to recover the balance due after a foreclosure sale, where the mortgagor is not the owner of the equity at the time of sale — the fact in the case at bar — it is open to the maker of the note to show as bearing upon the amount due that the sale was not conducted as it should have been and that more should have been realized; especially if the holder of the mortgage was himself the purchaser at the sale.” Kavolsky v. Kaufman, 273 Mass. 418 (173 N. E. 499).
The statute of Michigan relating to the foreclosure of real estate mortgages by advertisement (3 Comp. Laws 1929, § 14425 [Stat. Ann. § 27.1221]), and the validity of foreclosure sales under such statute depend upon the power contained in the mortgage giving to the mortgagee the right to foreclose the same and the inherent authority of the States over the titles to lands within their respective borders. Grannis v. Ordean, supra.
In consequence of the authority which government possesses over things within its borders, there is jurisdiction in a court of a State by a proceeding in rem to affect things within the jurisdiction of the court. Pennoyer v. Neff, supra; Haddock v. Had dock, 201 U. S. 562 (26 Sup. Ct. 525, 5 Ann. Cas. 1); Grannis v. Ordean, supra. The basis of jurisdiction to foreclose a mortgage in equity and to make a valid decree of foreclosure by sale of the real estate, and thus affect the title to the land without personal service upon the defendant, depends upon the same governing principle which upholds foreclosure by advertisement without personal service, — that is, upon the inherent authority of the State over all real estate within its borders. Such real estate may be bound, but no deficiency judgment can be recovered where there has been foreclosure by advertisement except after suit brought against the defendant and personal service had upon him within the jurisdiction of the court or by his personal appearance in such suit where he is given an opportunity to be heard and defend. The same principle governs in case of foreclosure in chancery of a real estate mortgage where there is no personal service upon the defendant who is outside the jurisdiction of the court and where there is no voluntary appearance in person or by attorney. Under such circumstances, no deficiency judgment or decree can be rendered except upon suit brought and jurisdiction acquired over the defendant by personal service of process within the jurisdiction of the court or by the defendant’s voluntary appearance in person or by attorney therein. The sale on foreclosure by advertisement is not binding as to the personal liability of the defendant, and the decree of a court in chancery, where there is no personal service within the jurisdiction of the court and no appearance by the defendant, is not binding upon the defendant personally in a suit for deficiency. If a decree for deficiency was entered by the court without jurisdiction acquired either by personal service or by entry of appearance, it would have no validity in the State where rendered, and it cannot have in this State any more validity than it would have in the State of Illinois. The same rule applies to proceedings by attachment (Bissell v. Briggs, 9 Mass. 462 [6 Am. Dec. 88]; Kilburn v. Woodworth, 5 Johns. [N. Y.] 37 [4 Am. Dec. 321]; Cooley’s Constitutional Limitations [6th Ed.], p. 498, and cases cited); to proceedings to foreclose a real estate mortgage (Williams v. Follett, 17 Col. 51 [28 Pac. 330]; Blumberg v. Birch, 99 Cal. 416 [34 Pac. 102, 37 Am. St. Rep. 67]); to proceedings where the title to land was being litigated (Pennoyer v. Neff, supra); to proceedings for the partition of lands (Grannis v. Ordean, supra); and to proceedings to enforce a lien against real estate (Pennoyer v. Neff, supra; Grannis v. Ordean, supra). In all these cases, no valid judgment can be rendered fixing personal liability upon the defendant without personal service of process within the State, or by his appearance in person or by attorney in the proceeding, because the fundamental requisite of due process of law, the opportunity to be heard, is wanting. Louisville & Nashville R. Co. v. Schmidt, 177 U. S. 230 (20 Sup. Ct. 620); Simon v. Craft, 182 U. S. 427 (21 Sup. Ct. 836); Grannis v. Ordean, supra. The proceeding is in rem and not in personam. It binds the thing, but does not bind the person. The same basic principle applies to cases of foreclosure of real estate mortgages by advertisement.
It is conceded that where suit is brought for deficiency in case of foreclosure by advertisement which has no binding force upon the defendant except as to’ the property, defendant may show, where the holder of the mortgage is the purchaser of the property, that the property was worth much more than the amount bid on the foreclosure, because he can be per sonally heard and make defense in no other way. In case a suit upon the note is instituted after foreclosure of a real estate mortgage in equity in another State, in which the defendant was not served with process and in which proceedings he did not appear in person or by attorney, such foreclosure may be binding as to the real estate, but it has no binding force except as to property within the jurisdiction of the court, and the defendant may show anything in his defense to a suit upon the note that he could show in case of foreclosure by advertisement. He can be personally heard and make defense in no other way.
The effect of holding the defendant may not make the defenses pleaded in this case is to hold that the decree of the chancery court of Illinois and the proceedings had thereunder, though void as a decree in personam against the defendant, is yet in full force and effect and binding upon him, — though' such decree was rendered without any jurisdiction over the person of the defendant and is, therefore, not binding upon him, it constitutes a valid adjudication of his personal liability, — that though no valid decree of the Illinois court could have been rendered in the State of Illinois binding the defendant personally, the record of such judicial proceedings is binding and conclusive evidence in this State of the defendant’s personal liability, — though it would have been invalid for the Illinois court to have rendered a decree binding the defendant personally, the effect of the decree rendered in the State of Illinois without personal service upon the defendant within the jurisdiction of the court and without his voluntary appearance is valid and binding upon him here. The effect of such holding would be to give the proceedings of the Illinois court in chancery, without any jurisdiction of the defendant personally, the same force and effect as if in such, proceedings the Illinois court had acquired jurisdiction of the defendant personally. Such a position is neither logically nor legally maintainable.
In proceedings of this character, the fair market value of the premises sold is a question of fact, Stone v. Haskell, 212 Mass. 283 (98 N. E. 1032); 3 Jones on Mortgages (8th Ed.), p. 18, § 1583, and the burden of proving that a higher price should have been obtained upon the sale of the property was upon defendant. Vahey v. Bigelow, 208 Mass. 89 (94 N. E. 249); Stone v. Haskell, supra; 3 Jones on Mortgages (8th Ed.), p. 18, § 1583.
After the cause was heard and submitted to the trial court, plaintiff made an application to reopen the case for the purpose of offering proof of the publication in the foreclosure proceedings in Illinois and mailing of notice thereof to defendant of an order of appearance of defendant made in the foreclosure case in Illinois. The trial court denied plaintiff’s motion. Granting or denying the motion rested in the sound judgment and discretion of the trial court. Had the facts sought to be shown been admitted, it could make no difference in the disposition of this case.
We find it unnecessary to pass upon whether there was such an extension of time as under the circumstances would release defendant and appellee from liability.
Judgment of the trial court affirmed, with costs.
Btjshnell, Sharpe, North and McAllister, JJ., concurred with Potter, J. | [
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Chandler, J.
Plaintiff was injured while riding as a passenger in a taxicab owned by the defendant Yellow & Checker Cab & Transfer Company while the same was being operated by defendant Sayen, an employee. This appeal by the taxicab company followed a denial of motions for judgment non obstante veredicto and a new trial.
It is claimed by appellant that at the time of the accident, plaintiff was a gratuitous guest passenger and that Sayen was not acting within the scope of his employment.
Defendant Sayen and Kenneth Mosher both drove cabs for appellant in the city of Flint and vicinity. Sayen worked on the night shift and Mosher during the day, the latter often hiring Sayen’s cab to take him to and from work at the regular meter rate for such trips.
On the evening of January 9, 1936, Sayen drove Mosher home from work, Mosher asking him to call for him about 8 o ’clock p. m. of the following day as he desired to take a trip to Bay City. He was told by Sayen that the fare would be $8 which was the regular rate fixed by the company for a trip from Flint to Bay City, and which was agreeable to Mosher. Sayen appeared at the appointed time on January 10, 1936, and the two started for Bay City, stopping first, however, to pick up Ruth Reno, a cousin of Mosher’s who also lived in Flint. They then proceeded to Bay City and upon arrival drove to the Pine Crest beer garden located about two miles from the northerly limits of the city. Mosher testified that he instructed Sayen to drive him to the tavern as he was expecting to find a certain girl there. The three entered the beer garden between 9:30 and 10 o’clock p. m. and ordered beer. While drinking, plaintiff, accompanied by her daughter Rose, her son, William, and a third person by the name of Pete Lap an, entered the establishment. Mosher invited the new arrivals to sit at his table. They accepted, and the entire group drank beer and danced until 11:30 p. m., with the exception of Sayen, who, throughout the testimony is referred to as “the driver,” despite the fact that he was well known to at least Mosher, Mrs. Steudle and family, and who it is claimed by plaintiff’s witnesses, drank but two bottles of beer during the entire evening, did not dance, and sat back from the table a few inches wearing his official cap because he was considered on this occasion as a servant and “the driver.”
Mosher did not find the girl for whom he was looking and at 11:30 p. m. directed Sayen to drive to a dance hall known as Lalonde’s, thinking he might find her there. The entire group entered the cab and were driven by Sayen to the designated place where Mosher made an unsuccessful search for his girl. Mosher returned to the cab and told Sayen to drive them back to Pine Crest. At Pine Crest, the members of the party partook of more liquid refreshments, with the exception of Sayen.
About 1:30 a. m., January 11th, someone suggested that they obtain something to eat and Mosher ordered Sayen to drive to Bay City for this purpose. They drove south on Henry Street to a point where it intersects with East South Union street. Sayen approached the intersection at a speed estimated to be between 25 and 30 miles per hour, being preceded by another automobile going in the same direction on the left side of the street. As he approached this car, Sayen twisted the wheel of the cab first one way and then the other, finally attempting to pass on the right side of the other vehicle. Just as he had passed, the cab struck a tree, resulting in plaintiff’s injuries. The following morning Rose Steudle pleaded guilty to being drunk and Sayen to a charge of driving while drunk.
We have related substantially the testimony relied upon by plaintiff, and which we must accept as true in disposing of this appeal. Likewise, we must accept the decision of the jury upon disputed questions of fact where the same is not contrary to the great weight of the evidence, with the observation, however, that were we the triers of the facts in this particular instance a different result would have been reached.
Whether plaintiff was a passenger for hire depends upon the status of Mosher at the time of the accident. If he was a passenger for hire, plaintiff was likewise as there is nothing to indicate that the guests invited by Mosher were considered as gratuitous passengers or were accepted by the driver as such or that it was intended that they occupied a position different from that of Mosher while being transported in the cab as his guests. Dion v. Drapeau, 254 Mass. 186 (150 N. E. 14). See, also, 4 A. L. R. 1507; 45 A. L. R. 304; 69 A. L. R. 995.
While being driven in the city of Flint and on short trips, the cabs were operated on a meter basis. For trips from Flint to other cities, a specified fixed rate was charged, which from Flint to Bay City was stated to be seven to eight dollars. Waiting time on snch trips was charged at the rate of $1.50 per hour which was also a pre-determined rate, not dependent npon the operation of the meter. Appellant claims that when Sayen had driven from Flint to Bay City, or at least as far as the Pine Crest beer garden, the contract of hire terminated and that thereafter the parties were being driven as gratuitous guest passengers. It was not necessary that the fare for the additional trips taken after arriving at Pine Crest be paid or agreed upon in advance. If Mosher entered the cab with the means and intention of paying therefor and was thus accepted by Sayen, the jury could have properly found that a contract of hire existed covering the trips made subsequent to the arrival at Pine Crest.
“Where a person enters a car for the purpose of becoming a passenger, and with the means and intention of paying his fare the actual payment of fare is not essential to the establishment of the relation of carrier and passenger; and where a person boards a train with money sufficient to pay his fare, it will ordinarily be presumed that he intends to pay his fare on demand, unless his conduct is such as to show that he is trying to evade a demand being made on him, as by hiding himself or otherwise, and if ho fails to pay after a demand and opportunity so to do the presumption ceases.” (10 C. J. p. 620, § 1043).
The foregoing quotation from the text is amply supported by the cases cited in the notes.
The trial court charged, on this question, that,
“If it was understood that the fare of $8 would cover the trip to Bay City and return, and also the waiting time, and such other traveling as might be made while in Bay City or in the vicinity, then the relation of carrier and passenger would continue during the trip from Pine Crest to the point where the accident occurred.”
The testimony does not substantiate an understanding that the original agreed price of $8 was also to cover additional trips after arriving at Pine Crest. However, appellant made no objection to this portion of the charge, and it has assigned no error thereon or upon the failure of the court to give a charge requested upon this point which more properly covered the issue. Therefore, we do not consider the question in disposing of the appeal.
It is claimed that Sayen was not acting within the scope of his employment because he was operating the cab in violation of certain rules promulgated by appellant in governing the conduct of their cabs and drivers. One of the rules required a driver to report before making out of town trips. Another prohibited drivers from drinking on duty. Plaintiff introduced evidence of consistent violation of many of the rules by the drivers in an attempt to show a waiver thereof on behalf of the company. This testimony was unimportant, however, because appellant’s liability does not depend upon whether or not Sayen was acting contrary to his employer’s orders. If he was engaged in the business of his master, the transportation of passengers for hire, appellant would be liable for his negligent acts even though at the time of the accident he was acting contrary to instructions. Loux v. Harris, 226 Mich. 315; Rabaut v. Ford Motor Sales Co., 285 Mich. 111. And, as we have seen, the question as to whether Sayen was transporting passengers for hire was one to be submitted to the jury and was determined adversely to appellant, which finding we are not at liberty to disturb.
Appellant disclaims liability on the additional ground that the parties were engaged in a joint enterprise, citing several cases including Hopkins v. Golden, 281 Mich. 389. Obviously, this rule is inapplicable in view of the claims and testimony produced by plaintiff to establish a contract of hire between Mosher and Sayen. Based upon that evidence, there was no common control and possession of the machine and community of interest so as to make Sayen the agent of all the other occupants of the car and his negligence imputable to them.
Appellant also urges that there was no evidence of negligence on the part of Sayen. Appellant, as a common carrier, owed a duty to plaintiff to exercise a high standard of care. Trent v. Pontiac Transportation Co., Inc., 281 Mich. 586 (2 N. C. C. A. [N. S.] 485). We believe a- question for the jury was presented on the facts stated as to whether or not Sayen was guilty of negligence.
It is also argued that plaintiff was guilty of contributory negligence in riding in the cab operated by Sayen when she knew or should have known he was intoxicated. Whether or not Sayen was intoxicated was also a question for the jury as the testimony on this point was conflicting.
Further, appellant urges that it is entitled to reversal because of certain statements made by plaintiff’s counsel in the course of his closing argument to the jury, which are claimed to have been prejudicial. The argument complained of was as follows:
“Mr. Leibrand: ‘When they got into Pine Crest they picked up Alice Steudle and her daughter and a couple of other men.’ That is the opening statement of defendant. What idea would a jury get from that if they hadn’t heard any testimony? The other two men turned out to be Mrs. Steudle’s son and innocent little Pete Lap an, a chum of Billy’s. The inference there that there were bad men and women.
“Mr. Henry: I object to that and take an exception to it.
“Mr. Leibrand: * * * And after he came back from Lalonde’s he didn’t drink a drop. Rushford with his conclusion that he was drunk. I wonder what the insurance company and taxicab company was doing from 2:30 until 9 o’clock when they accepted a plea of guilty over there in the police court.
“Mr. Millard: I take an exception to that remark about the insurance company.
“Mr. Leibrand: All right. Let me have that policy. I want it for my argument. At 2:30 in the morning the taxicab company was notified of the smashup. Counsel says: ‘We aren’t insured because they went over 10 miles from Flint,’ and finally they brought in a policy here that makes it 20 miles, so the taxicab company has to pay the damage if there is a judgment in this case, and yet they were not particularly interested about the thing; at 2:30 they got notice and by 9:30 they got over here they say, and Mr. Ellis, if he is one of their officers over there, just got into the police court after Sayen had plead guilty; after he was knocked unconscious, sewed up by a doctor and put into the bull pen for a couple of hours, no examination as to whether he had recovered consciousness or was in his right mind, and I want to say to you that that kind of a plea should not have been accepted and would not have been accepted by any court in Hitler Germany or Stalin Russia, that kind of a plea of guilty would not have been accepted in any other decent court in the world, where a man was in the condition Sayen was in at that time.
“Mr. Millard: An exception on the record to that argument.
“Mr. G. G. Leibrand: But he was given a good, stiff sentence. Now, this jury has a right not only to determine who is telling the facts in this case*and who is not telling the facts, hut there are circumstances in this case that gives you the right to look into those circumstances, and on that circumstantial evidence you can infer from what happened, and it is within your province to infer that this taxicab company is at the bottom of this whole diabolical thing, in arresting Sayen and having him plead guilty, and in arresting Rose Steudle, and she pleads guilty and tells you why.
“Mr. Millard: An exception.
“Mr. Leibrand: * * * This taxicab company,-by its corporate existence, can combine their energy and capital and do many things an individual cannot do; it has its ramifications all over the State wherever they are doing business.
“Mr. Millard: An exception to that, there is no such testimony as that.”
Exceptions were noted to this argument by appellant, but the court was not requested to warn the jury or charge them that the same was improper and should be disregarded.
In the case of Curth v. New York Life Ins. Co., 274 Mich. 513, and cases there cited, we held that in order to base error upon a claim of improper argument there should not only be an objection but the court should be requested to charge or caution the jury. Most of the cases concerned with the question seem to involve a single transgression which presumably occurred inadvertently.
We believe the record in the instant case shows a deliberate course of conduct on the part of counsel for plaintiff aimed at preventing defendant from having a fair and impartial trial. We think the course of misconduct was so persistently followed that a charge of the court in an effort to obviate the prejudice would have been useless.
We appreciate that this court has gone far in holding that an instruction of the trial court will cure an improper argument; and that the line of demarcation between an absolutely prejudicial argument, the effect of which cannot be removed from the minds of the jurors, and extravagant phrases spoken in the heat of argument, may be said to be a narrow and a wavering one. This presents the question as to whether it can be said that the effect of this unquestionably improper argument was such that if the trial court had rebuked counsel and charged the jury to disregard it the error would have been cured. It cannot be denied that a reading of the record in the instant case convinces one that the verdict of the jury was indeed strange.
The constant reiteration in his argument to the jury that the defendant was lax in ascertaining what happened in Bay City, and particularly that the jury could “infer that this taxicab company is at the bottom of this whole diabolical thing, in arresting Sayen and having him plead guilty, and in arresting Rose Steudle,” may well have been the basis for this unusual verdict of the jury. If this is so, would a charge by the trial court that there was nothing in the record to warrant this allegation and that the jury was to disregard the argument have been sufficient to rid their minds of the impression created; that is, that the defendant was seeking to avoid liability contrary to law? What effect the argument had upon the jury, and what effect a charge of the court to disregard that argument would have, is, of course, unknown, but it cannot be doubted that the argument was made to prejudice the minds of the jurors against the defendant taxicab company without any basis in the record.
It is our conclusion that the argument as made so inflamed the minds of the jury against the defendant that a charge to disregard it would have been useless; and that, therefore, it was unnecessary for the defendant to request such a charge.
Judgment reversed and a new trial granted, with costs to defendant.
Wiest, C. J., and Butzel, Btjshnell, Sharpe, Potter, North, and McAllister, JJ., concurred. | [
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Chandler, J.
On April 11, 1938, the council of the city of Mt. Morris adopted three ordinances, the validity of two of which are questioned by this appeal.
Ordinance No. 26 declared it to be unlawful for the proprietor, manager, lessee or operator of any establishment licensed by the liquor control commission to sell alcoholic beverages to permit dancing on said premises. It was also declared to be unlawful for any person or persons to dance in an establishment so licensed. Suitable penalties were provided for violations of the enactment.
Ordinance No. 27 declared it to be unlawful to dispense alcoholic liquor on Sunday and other specified legal holidays.
Plaintiff, the operator of a restaurant and tavern in said city, alleging inadequacy of legal remedy, filed his petition to obtain an order declaring said ordinances to be invalid. The ordinances in ques tion were upheld by a decree of the lower court from which petitioner appeals.
Appellant contends that ordinance No. 26, relating to dancing, is violative of Const. 1908, art. 16, § 11, as amended in 1932, which provides:
“The legislature may by law establish a liquor control commission, who, subject to statutory limitations, shall exercise complete control of the alcoholic beverage traffic within this State, including the retail sales thereof; and the legislature may also provide for an excise tax on such sales: Providing, however, that neither the legislature nor such commission may authorize the manufacture or sale of alcoholic beverages in any county in which the electors thereof, by a majority vote, shall prohibit the same.”
He contends that inasmuch as complete control of the alcoholic beverage traffic in this State has, by constitutional provision, been vested in the liquor control commission, the city of Mt. Morris had no authority to enact the ordinance regulating dancing. It appears from the briefs that by Rule No. 15 of the rules and regulations of the liquor control commission , the latter has also adopted a measure seeking to control dancing in licensed establishments.
The charter of the city grants the power to the council to “restrain, license and regulate public dance halls and regulate and prescribe the location thereof.” Although the constitutional provision mentioned and the statute enacted pursuant thereto, Act No. 8, Pub. Acts 1933 (Ex. Sess.), as amended (Comp. Laws Supp. 1935, § 9209-16 et seq., Stat. Ann. § 18.971 et seq.), grant broad regulatory powers over the alcoholic beverage traffic to the commission, the city was not thereby deprived of the right to exer cise its power to regulate and control dancing in public places as conferred by tbe provisions of its charter. The fact that the commission likewise has by rule attempted to exercise control of dancing in licensed establishments is of no importance.
Petitioner contends that ordinance No. 27 is invalid as violative of the same constitutional provision and that the authority to prevent sales of alcoholic beverages on Sunday and stipulated holidays is solely vested in the liquor control commission.
Section 1 of Act No. 8, Pub. Acts 1933 (Ex. Sess.) (Comp. Laws Supp. 1935, § 9209-16, Stat. Ann. § 18.971) provides in part:
“Except as by this act otherwise provided, the commission shall have the sole right, power and duty to control the alcoholic beverage traffic and traffic in other alcoholic liquor within the State of Michigan, including the manufacture, importation, possession, transportation and sale thereof.”
Section 19 of the act as amended by Act No. 281, Pub. Acts 1937 (Stat. Ann. 1938 Cum. Supp. § 18.990) provides:
‘ ‘ The legislative body of any city, village or township may, by resolution or ordinance, prohibit the sale of alcoholic liquor for consumption on the premises on any Sunday, legal holiday, primary election day, general election day or municipal election day.”
It is to be noted that the constitutional provision grants complete control to the liquor control commission subject, however, to statutory limitation. This was a restriction placed in legislative hands upon the powers theretofore granted to the commission. The legislative right to limit the constitutional grant of power to the commission was properly exercised when it, by the statutes above quoted, vested the legislative bodies of cities with the authority to prohibit the sale • of alcoholic liquor on the days therein specified.
Appellant also contends that under the constitutional provision only the ‘' electors of a county have a right to prohibit the sale of alcoholic liquor whether it be a partial prohibition as in this case of an entire prohibition,” and that the city council therefore has no authority to prohibit such sales. The constitutional provision is a restriction upon the authority of the legislature and the liquor control commission, prohibiting the authorization of sales in counties wherein the electors have voted that the same shall be prohibited. It is not a restriction upon the power of legislative bodies of municipalities to prohibit such sales within their jurisdiction.
We therefore hold that the ordinances are valid and not subject to the constitutional objections raised by appellant.
The decree is affirmed. Inasmuch as a question of public interest is involved, no costs are allowed.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, and McAllister, JJ., concurred. North, J., took no part in this decision.
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Carr, C. J.
Tips case resulted from a one-man grand-jury inquiry, conducted in Wayne county by the Hon. George B. Murphy, one of the circuit judges of said county. The proceeding was instituted May 14, 1946, on the petition of the prosecuting attorney of said county. Following the examination of a number of witnesses, including the appellee Herman Prujansky, the circuit judge, under date of September 7, 1946, issued a warrant against defendants Hoffa, DeMass and Stewart. The first count of said warrant charged the offense of criminal conspiracy to obtain a certain sum of money, by means of false pretenses, from Prujansky and other named persons. The second count charged an attempt to obtain said sum from Prujansky and others by such means; and the third count charged the attempted larceny of the money by trick. The warrant was certified by the clerk of the Wayne circuit court to the recorder’s court of the city of Detroit for proceedings thereon.
Under date of October 16,1946, an indictment was returned by a grand jury to the United States district court for the eastern district of Michigan, southern division, charging Herman Prujansky with a violation of the United States criminal code, chap*. 302, 48 Stat. at L. 782, as amended August 2, 1946, chap. 735, 60 Stat. at L. 789 (18 USOA, § 408 [e]). It was alleged therein that on or about August 8, 1946, Prujansky traveled in interstate commerce from Detroit to California with intent to avoid, giving testimony in a criminal proceeding, then pending in the circuit court for Wayne county, State of Michigan, wherein' the commission of a felony was charged. Following the filing of the indictment in the Federal court, Prujansky returned to Michigan. The warrant issued by Judge Murphy was duly served on the defendants named therein, the date for the preliminary examination was fixed, and Prujansky was subpoenaed as a witness for the people. At such examination, held before Hon. Gerald W. Groat, one of the judges of the recorder’s court for the city of Detroit, after other witnesses had been called and examined, Prujansky was questioned by a special assistant attorney general on behalf of the people. After testifying as to his name, residence, nature of business,i and place of business, he refused to answer certain other questions, 12 in number, concerning his acquaintance with the defendants in the case; whether he had talked to any of the defendants during the period between October 29, 1945, and January 10, 1946; whether he had been in the offices of any of the defendants ; whether the license for the business conducted by the witness was in his name; whether such license had ever been revoked; whether he had presented a watch to defendant Stewart; and whether he had taken the sum of $2,000 belonging to the witness, and his partners to the office of defendant Hoffa at any time between October 29,1945, and January 10, 1946. The refusal to answer was predicated on article 2, § 16 of the State Constitution, the witness claiming that his answers might tend to incriminate him. Apparently the claim* had reference to the case pending against the witness in the Federal court wherein he was charged with traveling from this State in interstate commerce with intent to avoid giving testimony im-a-criminal proceeding then pending in the circuit court for Wayne county. Judge Groat sustained the refusal of the witness to answer the questions and entered an order accordingly, reciting therein the court’s conclusion “that the answers to the aforesaid'ques tions would tend to prove that he was a material witness in the above-entitled cause, and that the answers thereto might tend to incriminate him in the aforesaid criminal prosecution in the United States district court.” From such order an appeal has been taken by the people, leave therefor having been granted.
As before noted, the indictment returned against Prujansky in the Federal court charged that the offense therein set forth was committed on or about August 8, 1946. Said date preceded by approximately one month the issuance of the warrant against defendants Hoffa, DeMass and Stewart. Appellant contends that the “criminal proceeding” pending in the circuit court for the county of Wayne, referred to in the Federal charge against Prujansky, must be deemed to be the grand-jury inquiry pending before Judge Murphy. The record does not indicate any other proceeding of the character stated. It may be inferred, in consequence, that appellant’s contention is correct.
The principal question at issue in the case is whether the answers to the questions, to which the witness declined to reply, might have tended to incriminate him in the case pending against him in the Federal court. The witness having invoked the protection of the provision of the Constitution above cited, it was incumbent on the judge conducting the examination to determine the issue and either compel the witness to answer or sustain his refusal to do so. The matter was not solely for the determination of the witness.
Chief Justice Marshall in United States v. Burr (Case No. 14692e), 25 Fed. Cas. p. 38, 40, 1 Burr’s Trial, 244, referring to the right of a witness to refuse to incriminate himself, stated the rule in the following language:
“When a question is propounded, it belongs to the court to consider and to decide, whether any direct answer to it can implicate the witness. If this be decided in the negative, then he may answer it without violating the privilege which is secured to him by law. If a direct answer to it may criminate himself, then he must be the sole judge what his answer would be. The court can not participate with him in this judgment, because they can not decide on' the effect of his answer without knowing what it would be; and a disclosure of that fact to the judges would strip him of the privilege which the law allows, and which he claims. It follows necessarily then, from this statement of things, that if the question be of such a description, that an answer to it may or may not criminate the witness, according to the purport of that answer, it must rest with himself, who alone can tell what it would be, to answer the question or not. If, in such a case, he say, upon his oath, that his answer would criminate himself, the court' can demand no other testimony of the fact.”
The foregoing statement was quoted with approval in the case of In re Moser, 138 Mich. 302, 306 (5 Ann. Cas. 31), where it was said:
“The witness himself is not the sole judge of whether an answer to a question will tend to criminate himself. The due administration of the law does not pérmit him to arbitrarily hide behind a fancied or intangible danger to himself. It gives him no right to attempt to avert real danger from others, no matter how closely he may be associated with them. Unless the answer to the question may tend to criminate himself, he must answer, whatever the consequence may be to others; otherwise the administration of justice would be seriously obstructed.
“The position on behalf of the petitioner appears to be that the witness himself is the sole judge, and that, when he says the answer may tend to criminate him, the controversy is closed. The Constitution vests in the witness no such arbitrary power, and we are cited to no decision which goes to that extent.”
Likewise, in Re Allison, 156 Mich. 34, 39, the Court citing In re Moser, supra, said:
£ £ "Where the constitutional privilege is claimed by a witness under oath, the true rule is that it must obtain, unless the court is able to say, as a matter of law, that any direct answer to the question can not tend to incriminate the witness.”
See, also, In re Mark, 146 Mich. 714; People, ex rel. Moll, v. Danziger, 238 Mich. 39 (52 A. L. R. 136); In re Bommarito, 270 Mich. 455. The foregoing cases were cited in the case of In re Schnitser, 295 Mich. 736, where the Court, after referring to the rule laid down by Chief Justice Marshall in United States, v. Burr, supra, said:
“If a direct answer, to the question propounded may incriminate, the privilege of silence must be accorded. But the liberality of construction to be accorded is not to be extravagantly extended so as -to obstruct the administration of justice when an answer will not jeopardize. Mason v. United States, 244 U. S. 362 (37 Sup. Ct. 621, 61 L. Ed. 1198).. The Constitution does not permit the witness fto arbitrarily hide behind a fancied or intangible danger’ (In re Moser, supra). The tendency to incriminate must be a reasonable one; an,answer may not be withheld because it might possibly under some conceivable circumstances form part of a crime.”
It is apparent from the language of the order entered by Judge Groat, from which the appeal has been taken, that he concluded on the basis of the record before him that the answers to the questions which Prujansky declined to answer, might tend to incriminate him in the case pending in the Federal court. Such conclusion may not be disturbed unless it appears that Prujansky could not, had he answered the questions directly, have incriminated himself.
The statute on which the Federal indictment against Prujansky is based refers, in terms, to traveling from any State, in interstate commerce, with intent to avoid giving testimony in- a criminal proceeding in which a felony is charged. Intent is, in consequence, a material element. The indictment against Prujansky specifically charges such intent on his part. The questions asked of Prujansky on the preliminary examination before Judge Groat had reference to his acquaintance with the defendants in the case, to visits that he may have made to their respective offices, to possible conversations with them, and suggested dealings that he may have had with defendants Stewart and Hoffa. The queries with reference to the license of the business place that the witness operated, in conjunction with others, presumably rested on the theory that the defendants, or some of them, were concerned in the matter. Otherwise the subject referred to may scarcely be regarded as material in the case against defendants.
May it be said that if the witness had answered the questions in such manner as to indicate acquaintance, conversations, and dealings with the defendants, such answers would not have tended to incriminate him because of their bearing on the intent with which he left the State of Michigan? Such answers might well have suggested a reason or motive for reluctance on: his part to give testimony before Judge Murphy with reference to possible criminal acts committed by defendants. As before noted, the warrant against defendants issued by Judge Murphy in the course of his grand-jury in vestigation specifically alleged that Prujansky was one of the parties against whom the offenses set forth were directed. Intent is necessarily a matter of inference from established facts. In determining the question whether Prujansky left the jurisdiction in order that he might not be required to give testimony with reference to acts, or alleged acts, of the defendants, the nature' of his acquaintance with them, and of his dealings with them, may become proper matters for consideration on the trial in the Federal court. His state of mind at the time he left the State of Michigan, and the reasons prompting his action, together with all other attendant facts and circumstances tending to throw light op. the issue of intent, may be material subjects for inquiry.
In 20 Am. Jur. p. 316, it is said:
“In criminal prosecutions, whenever the motive or intent of the accused is important and material, a somewhat wider range of evidence is permitted in showing such motive or intent than is allowed in support of other issues; otherwise, there'' would often be no means to reach and disclose the secret design or purpose of the act charged, in which the very gist of the offense may consist. Such intent or motive may be proved by either direct or circumstantial evidence. All evidentiary circumstances which are relative to, or tend to shed light on, the motive or intent of the defendant or which tend fairly to explain his actions are admissible in evidence against him, although they may have occurred previous to the commission of the offense.”
In referring to an analogous subject it was said in Glasser v. United States, 315 U. S. 60, 81 (62 Sup. Ct. 457, 86 L. Ed. 680):
‘ ‘ Trial judges have a measure of discretion' in allowing testimony which discloses the purpose, knowledge, or design of a particular person. Butler v. United States (C. C. A.), 53 Fed. (2d) 800; Simpkins v. United States (C. C. A.), 78 Fed. (2d) 594, 598.”
On the subject of proving intent by reference to the facts and circumstances surrounding the transaction involved see Bentley v. Caille, 289 Mich. 74; Farrell v. Paulus, 309 Mich. 441; Brydges v. Emmendorfer, 311 Mich. 274.
In People v. Kert, 304 Mich. 148, there was indorsed on the information the name of a party who was a defendant in another criminal case involving alleged gambling operations. Such party was offered for cross-examination and was asked by the attorney for the defendant certain questions which he declined to answer Such questions had reference to visits by the witness to a cafe operated by defendant Kert, and, also, as to the acquaintance of the witness with a certain waitress who had been a witness in the case. It was held that the trial court properly sustained the refusal of the witness to answer the questions. In discussing the situation, it was said in part:
“Defendant claims it was error not to compel Watkins to reply to the questions asked, that a witness has not the absolute right to refuse to answer all questions on the ground that it might be incriminating ; that he solely has the option to refuse, and then it is the duty of the judge to determine whether the testimony would be incriminating or not. See In re Watson, 293 Mich. 263. This unquestionably is true, but the judge as a rule must exercise caution so as not to deny a witness his constitutional rights against self-incrimination. Watkins was a defendant in a case in which his connection with gambling was at issue; and if he had gone to Kert’s cafe adjoining the gambling house, it might be a very important link in the chain of cir cumstances that tied him up with the gamblers. This also would be true of his meeting defendant Kert and others at the cafe, or taking meals there. These were the main questions that were asked and we can readily see how his answers, if they corroborated other witnesses,, might tend to incriminate him. Kert did not testify. While there is no question that the witness is not the sole judge of whether the answer to the question will incriminate him or not, it is largely discretionary with the judge in the first instance to determine whether the witness should be obliged to answer or not, when he invokes his constitutional privilege. The correct rule is stated in Russell v. United States (C. C. A.), 12 Fed. (2d) 683, 693:
4 4 4 The judge, who saw the witness and who heard the government’s testimony, * * * believed the claim of incriminating tendency was made in good faith, and that the witness was entitled to assert the privilege. In the absence of manifest error, this ruling should not be reversed.’ ”
See, also, People v. Robinson, 306 Mich. 167; People v. Roxborough, 307 Mich. 575. Under the facts in the case at bár it can not be said that Prujansky’s answers to the questions propounded to him, and which he declined to answer, might not have incriminated him. In consequence it can not be said that there was 44manifest error” in the order from which the appeal has been taken.
It is further claimed on behalf of appellant that if Prujansky’s answers to the questions discussed might have tended to incriminate him he waived the privilege of declining to answer by his replies to certain inquiries propounded to him on the preliminary examination. As before stated, he testified as to his name, place of residence, and the nature and location of his business. He also .testified that he knew Sam Bernstein. and Louis Bernstein, and that they were his partners in said business. Reliance is placed on the case of Foster v. People, 18 Mich. 266. There a witness for the people gave .testimony, not only tending to show the guilt of the defendant but, also, his own guilt, of the crime of larceny. On cross-examination he was interrogated with reference to an affidavit that he had made in which he averred that he had a good defense upon the merits, and was asked what the defense was. The witness declined to answer the question and the trial court refused to require him to do so. It was held that such refusal was error in view of the fact that the witness had previously given testimony showing his guilt. The general principle involved was stated in the following language:
“Accordingly, where a witness has voluntarily answered as to material criminating facts, it is held with uniformity that he can not then stop short and refuse further explanation, but must disclose fully what he has attempted to relate. This view is adopted by the text writers, and is very well explained in several of the authorities, where the principle is laid down and enforced.”
The weight of authority seems to support the view that a witness who discloses a criminal transaction on his part without invoking his privilege against self-incrimination, waives, the privilege with respect to the details and particulars of the fact or transaction disclosed. See annotation 147 A. L. R. 255. This is, in substance, the contention of counsel for the appellant in their brief. However, the record in the case at bar does not justify or permit the application of suchu principle. The matters to which Prujansky testified on the preliminary examination did not relate to his acquaintance, associations or dealings with the defendants, or any of them. The situation is materially different from that involved in Foster v. People, supra. There the witness went to the extent of testifying to facts establishing his guilt of a criminal offense. The questions that he refused to answer on cross-examination indicated an attempt to impeach the testimony that he had previously given. In the case at bar, however, the questions that Judge Groat refused to compel Prujansky to answer were clearly not designed to clarify, or otherwise affect, the testimony given without objection. Such testimony did not constitute a waiver of the constitutional privilege against s elf-incrimination.
Other questions raised by counsel in their briefs do not require specific consideration. For the reasons above statqd we conclude that the order from which the appeal has been taken is not open to objection on any of the grounds urged against it by appellant. The order is„, therefore, affirmed.
Butzel, Bushnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Bushnell, J.
Plaintiff Anna Bemke is the widow of Joseph J. Bemke, who prior to his death on April 5,1939, was a sergeant in the police department of the city of Detroit, with which he had been connected for approximately 15 years. Believing that his0 death, following an operation, was the result of injuries received in the line of duty, plaintiff sought a pension under the provisions of the charter of the city of Detroit, title 4, chap. 21, § 19, as amended.
The police pension committee, after considering the matter at various hearings, denied the widow’s petition on October 20,1942. On December 17,1945, plaintiff requested that the case be reopened and submitted affidavits showing that Bemke had reported to his district inspector sometime during the early part of December, 1937, that while making an arrest he had been severely kicked in the abdomen, resulting in an injury for which medical attention was required. In denying the petition for rehearing “unless something new and definite connecting the bladder and liver condition with the alleged injury could be submitted,” the committee stated that it had not questioned the alleged injury but had based its conclusions “entirely upon competent medical testimony,” particularly that of the surgeon who had operated upon Bemke shortly before his death. This physician, Dr. Archibald D. McAlpine, signed the death certificate which recites the immediate cause of death as “liver abscess,” adding thereto “cholecystitis” as a contributory cause, and contains the dates of three gall bladder operations in 1938. The committee’s records include, the medical history of Sergeant Bemke, with the details of these operations, together with 12 blood transfusions. This history shows that, after being in the hospital continuously from September 2, 1938 to April 5, 1939, Bemke succumbed to general toxemia from an abscess of the liver.
Following the denial of her petition, plaintiff sought mandamus from the circuit court to direct the pension committee to conduct a rehearing and grant her a pension. She demanded a trial by jury in the circuit court. Defendant city of Detroit and the members of the police pension committee replied to plaintiff’s petition, moved to strike the demand for a jnry, and sought a judgment on the pleadings as a matter' of • law. The trial judge determined -.that there was no controverted issue of fact to be decided and that defendants were entitled to a judgment on the pleadings.
. The physicians who testified before the committee in behalf of plaintiff stated that Bemke’s gall bladder condition could have been the result of an external injury. One of the physicians, Dr. G. K. Glasgow, admitted, however, that he had never seen Bemke and was basing his conclusion entirely upon the case history as reported to him by others. Dr. W. C. Wood, chief physician of the police department, reported in detail regarding the facts leading up to Bemke’s death, and stated that in his opinion it was the result of natural causes. Dr. McAlpine reported as follows:
“Officer Joseph J. Bemke was admitted to Harper Hospital March 5, 1938; was discharged May 14, 1938 and readmitted to Harper Hospital September 2, 1938, where he was under treatment until his death on April 5, 1939.
“Officer Bemke was first admitted with a diagnosis of acute gall bladder disease and upper respiratory infection for which he was treated for one week in preparation for a gall bladder operation. At operation he was found to have acutely inflamed gall bladder containing stones. The operation consisted of removing these and the gall bladder.
“Officer Bemke had a difficult convalescence complicated by pneumonia. He was discharged from the hospital May 14, 1938, and re-entered September 2, 1938,.with a biliary fistula. This did not respond to treatment and the patient became progressively worse developing liver damage and abscess to which he succumbed.
“The illness of officer Bemke was acute gall bladder infection complicated by liver infection and abscess and in my opinion was not the result of any accident or injury.”
Plaintiff contends on appeal that the trial court erred in dismissing her petition for mandamus, because the record discloses that the action of the committee was “arbitrary” or “capricious,” and sbe urges that she was entitled to a jury’s determination of this fact. Defendants point out, however, that the charter of the city of Detroit makes- no provision for appeal or review of pension applications by the courts and that courts have no jurisdiction to set aside the factual findings of a police pension committee where there is substantial evidence in support thereof. They contend that they were entitled to a judgment under the provisions of Court Rule No. 30, §7 (1945).
Section 19, supra, of the charter of the city of Detroit reads in part as follows:
“Whenever any member shall be killed or die from the effect of injuries received while in the performance of duty, the widow and children, if any, * * * of any member who has been killed or has died, since October 1, 1924, from the effect of injuries received while in the performance of duty, shall by vote of the police pension committee herein provided be paid a pension.”
The portions deleted from the above have to do with pensions to others than a widow.
A comparable charter provision in effect in 1915 was construed in a mandamus action, McCarthy v. Couzens, 214 Mich. 501, where the Court said:
“The question for determination at the hearing by the fire commission on April 20, 1916, was: While in the discharge of his duties did McCarthy receive injuries which resulted in his death within one year thereafter? This was a question of fact for the judgment and discretion of. the commission whose function was not ministerial hut quasi-judicial. The charter provided no appeal from or review of its decision. ’ ’
In that case, as in the instant one, no claim was made that the hearing was not full and fair, yet it was asserted that the action of the commission was arbitrary, capricious, unreasonable and contrary to the established facts. This Court further said in that case:
“In passing upon the issue of fact before the commission at its hearing on April 20, 1916, its ac-' tion is not shown to have been fraudulent, arbitrary or capricious. In the absence of such showing the action of the commission must be deemed final and we have no right to interfere by mandamus, no right to substitute our judgment or discretion for that of the commission.”
In the recent case of Nyman v. Detroit Police Pension Committee, 302 Mich. 520, 525, we said:
“We shall not discuss the testimony except to. state that it fully sustains the committee in its third and final denial of plaintiff’s petition for a pension. The committee was neither arbitrary nor capricious, nor did it act fraudulently, in coming to its determination. Notwithstanding this fact, the trial judge on reading the transcript of the testimony taken before the committee issued a writ of mandamus ordering the committee to grant a pension. He took upon himself the performance of the duties of the committee and substituted his own judgment for that of the committee. This, of course, he had no right to do. The determination of the committee, being neither arbitrary, capricious nor fraudulent, was final.”
There is sufficient testimony in the instant case to support the findings of the committee and nothing has been show in this record to justify the conclusion that its action was arbitrary, fraudulent or capricious. We are controlled by the rule stated in the McCarthy and Nyman Cases.
The trial judge did not err in denying plaintiff’s petition for mandamus. The order denying the petition for writ of mandamus is affirmed, but without costs, a public question being involved.
Carr, C. J., and Butzel, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Carr, C. J.
The plaintiff in this case was organized as a Michigan corporation in 1935 and has continued to carry on its business within the State since that time. Pursuant to the provisions of section 82 of the general corporation act, * plaintiff, in August, 1943, filed its annual report for the calendar year 1942, and in August, 1944, filed a similar report for the year 1943. Said section, as last amended by Act No. 58, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 10135-82, Stat. Ann. 1946 Cum. Supp. § 21.82), requires such report to contain, among- other data: “A complete and detailed statement of the assets and outstanding liabilities of the corporation as shown by the books of such corporation, at the close of business on the 31st day of December or upon the date of the close of its first fiscal year, next preceding which shall be the same balance sheet statement as furnished to shareholders, as provided by law.” There is no question in the case but that plaintiff’s reports were in compliance with the pertinent provisions of the statute and were seasonably filed.
At the time the report for the year 1942 was filed plaintiff paid to the State the annual fee on the privilege of exercising its franchise to do business in this State, in the sum of $691.66, computed on its paid-up capital and surplus as shown by the report. The same procedure was observed the following year, the amount of the privilege fee so paid being the .sum of $1,054.84. This was done in accordance with 2 Comp. Laws 1929, § 10140, as last amended by Act No. 13, Pub. Acts 1933 (Ex. Sess.), (Comp. Laws Supp. 1940, § 10140, Stat. Ann. § 21.205), which reads as follows:
“Every corporation organized or doing business under- the laws of this State, excepting railroad companies and interurban railroad companies, and telephone and telegraph companies, express companies and foreign insurance companies, and such corporations now in existence or hereinafter incorporated formed with the consent of the banking commissioner for the State of Michigan for the purpose of taking over all or a part of the assets of closed banks or trust companies with the intent and purpose of liquidating such assets' when and as conditions warrant such action by said corporations, shall, at the time of filing its annual report with the secretary of State of this State, as required by section 82 of act number 327 of the public acts of 1931, for the privilege of exercising its franchise and of transacting its business within this State, pay to the secretary of State * an annual fee of 2% mills upon each dollar of its paid-up capital and surplus, but such privilege fee shall in no case be less tbail $10 nor more than $50,000. It is the intent of this section to impose the tax herein provided for upon every corporation, foreign or domestic, having the privilege of exercising corporate franchises within this State, irrespective of whether any such corporation chooses to actually exercise such privilege during any taxable period.”
During the years 1942 and 1943 plaintiff was engaged in the manufacture of hitch equipment and trailer accessories for contractors doing war work for the Federal government. Such operations were conducted under contracts, some of which were renegotiated by the Federal government in the latter part of 1944, in accordance with the renegotiation act of 1942. This proceeding resulted in plaintiff paying to the government because of excess profits received in the year 1942, the sum of $98,000, and in the year 1943, the sum of $50,000. Plaintiff took no appeal, as authorized by the act, to the tax court of the United States for a fedetermination of the amounts of the required payments.
Claiming that the surpluses shown by its reports for the years 1942 and 1943 should be reduced in amounts equal to the payments to the Federal government, plaintiff made a demand, under date of September 11, 1944, on the Michigan corporation and securities commission for a refund, on the ground that the privilege fees for the years in question had been overpaid in the 'aggregate sum of $615. The demand being refused, plaintiff brought suit in the court of claims seeking to recover the amount in question. It was conceded before the trial court that if plaintiff is entitled to recover at all the amount of the judgment should he the sum claimed.
Plaintiff contended in the court of claims that it was entitled to judgment in its favor on the theory that the ampunts of the privilege fees paid by it to the State for the years 1942 and 1943 were excessive because of mistake oil plaintiff’s part. It was fur-, ther contended that such payments were “involuntary. ’ ’ The trial court determined that the defenses urged were not tenable and entered judgment for the defendant. Plaintiff has appealed, setting forth its claims in its brief as follows:
“That the trial judge erred in finding:
“1. That the overpayments of privilege fees on surplus for the years 1942 and 1943 were voluntarily made by the plaintiff.
“2. That the said overpayments of privilege fees were not due to mistake of fact, on the part of plaintiff, with relation to the amount of its surplus, as shown in its reports.”
Under the specific terms of the statute above quoted, the annual fee is imposed on the privilege of transacting business within this State. It is not based on the actual transaction of business. In re Detroit Properties Corp., 254 Mich. 523. Nor is it a tax levied upon proceeds derived from the carrying on of business. In re Detroit International Bridge Co., 257 Mich. 52. The term “surplus” is defined in 2 Comp. Laws 1929, § 10143, as amended by Act No. 102, Pub. Acts 1935 (Comp. Laws Supp. 1940, §10143, Stat. Ann. §21.208), as follows:
“The term ‘surplus’ as used in this act, shall be taken and deemed to mean the net value of the corporation’s property, less its outstanding indebtedness and paid-up capital.”
In the case of In re Appeal of Newton Packing Co., 279 Mich. 139, the Court, after referring to the statutory definition of surplus, said:
“Inasmuch as by Act No. 327, § 82, subd. (m), ■Pub. Acts 1931 (as last amended by Act No. 194, Pub. Acts 1935 ), the ‘assets and outstanding liabilities’ are to he reported as of December 31st next preceding, it is clear that, for the purpose of computing the annual privilege fee, the ‘surplus’ item is to he taken as of December 31st next preceding. This being so, it must have been the intention of the legislature that paid-up capital he reported as of December 31st next preceding.”
In Re Nelson Brothers Co., 297 Mich. 566, it was further said:
‘ ‘ The obligation of a corporation to pay the privilege tax is a liability that becomes due and owing on the date prescribed by law. In re Johnston-Newton Co., 225 Mich. 53,”
The amount of the privilege tax owing by the plaintiff at the time it filed its, annual report for 1942 in August of the following year, was computable on the basis of paid up capital and surplus, determined as of December 31, 1942. The privilege fee for the year 1943 was determinable in like manner. Tinder the specific terms of the statute, payment was required to he made each year at the time of the filing of the annual report. Plaintiff complied with such requirement. The privilege tax for each year in question was computed on the basis of the report for such year. Plaintiff contends that the computation made on the basis of each report was merely tentative. It was, however, accepted in each instance by the corporation and securities commission. It does not appear that there was any reason for questioning either the correctness of the reports or the accuracy of the computations.
At the time the privilege fees were due and paid the renegotiation of plaintiffs contracts was a mere possibility. There was no “outstanding indebtedness” then existing to the Federal government that might have been taken into consideration in determining the amount of the surplus for either 1942 or 1943. The statute cannot be construed as authorizing a deduction based on a speculative or contingent liability. 14 Fletcher, Cyclopedia Corporations (1945 Rev.), p. 817; People, ex. rel. The Butterick Publishing Co., v. Purdy, 153 App. Div. 665 (138 N. Y. Supp. 707), 208 N. Y. 620 (102 N. E. 1109). See, also, People, ex rel. National Surety Co., v. Feitner, 166 N. Y. 129 (59 N. E. 731). Events occurring after tax liability has been ‘determined in accordance with statute may not, in the absence of legislative authority, affect such liability. Case v. City of Detroit, 129 Mich. 298.
In reporting the amount of the surplus for 1942, and later for 1943, the plaintiff was not mistaken as to any past or existing fact. The most that can be said is that it did not anticipate the action subsequently taken by the Federal government. In any event the privilege fees were properly computed on the basis of the capital stock paid in and the actual surplus on the last day of each of the years covered by the reports. Insofar as the computation of said fees is concerned the subsequent payments to the Federal government can not be given a retroactive effect by way of reduction of the surplus items set forth in the reports. The conclusion necessarily follows that the fees were properly computed and plaintiff paid the amounts actually owing to the State.
The conclusion above indicated renders it unnecessary to give extended consideration to plaintiff’s claim that it paid the privilege fees in question involuntarily or under duress. A valid tax may not be recovered by the taxpayer on the theory of “involuntary payment.” Godkin v. Township of Doyle, 143 Mich. 236.
The judgment is affirmed. Because of the public nature of the question involved, no costs are allowed.
Btitzel, Bushnell, Sharpe, Boyles, Reid, and North, JJ., concurred. Dethmebs, J., did not sit.
Aet No. 13, Pub. Acts 1935, as amended by Act'No. 228, Pub. Acts 1939 (Coijip. Laws Supp. 1940, § 9769-1 et seq., Stat. Ann. and Stat. Ann. 1946 Cum. Supp. §§ 19.781-19.784), transferred the powers and duties of the secretary of State relative to corporations to the corporation and securities commission.—Reporter.
(Apr. 28, 1942, c. 247, title 4, § 403, 56 Stat. at L. 245, as amended Oet. 21, 1942, e. 619, title 8, § 801 (a-e), 56 Stat. at L. 982; July 1, 1943, e. 185, § 1, 57 Stat. at L. 348; July 14, 1943, e! 239,.§§ 1-4, 57 Stat. at L. 564; Feb. 25, 1944, 12':49 p.m., E.W.T., c. 63, title 7, § 701 (b), 58 Stat. at L. 78 [50 USCA, App. § 1191].)
This .section has since been amended by Act No. 350, Pub. Acts 1937, and Act No. 58, Pub. Acts 1939 (Comp. Laws Supp. 1940, § -10Í35-82, Stat. Ann. 1946 Cum. Supp. § 21.82).—Reporter.
See Act No. 327, § 91, Pub. Acts 1931, as amended by Act No; 96, Pub. Acts 1933 (Comp. Laws Supo. 1940, § 10135-91, Stat. Ann. §21.91), as well as 2 Comp. Laws 1929, §10140, as amended by Act No, 13, Pub, Acts 1933 (Ex, Seas,), above cited,-—-Reporter.
Act No. 327, Pub. Acts 1931, as amended (Comp. Laws Supp. 1940, § 10135-1 et se%,, Stat, Ann, § 2l.l et-seq,). | [
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Reid, J.
The parties to this divorce action were married May 9, 1936. and separated December 21, 1944; one daughter, Georgiana, was born May 26, 1937. Plaintiff claimed extreme cruelty as the ground for her divorce. Defendant withdrew his answer and cross bill, contested plaintiff’s claims as to property settlement only, and did not contest the granting of a divorce or granting of custody of the daughter to plaintiff. The trial court granted plaintiff a decree of divorce and custody of the daughter, and in the property settlement awarded plaintiff the household furniture and furnishings and awarded defendant the 1941 Nash automobile. The decree further ordered that the residence of the parties at 18466 Coyle avenue, Detroit, be sold to a specified purchaser for $12,000, and that after the payment of the mortgage, which seems to have amounted to about $4,500 at the time of the hearing, and the commission fee for sale, $600, the balance of the sale price 'of $12,000 be divided equally between the two parties. The decree further ordered defendant to pay $8 per week while not in full employment for the support of the daughter until she arrived at the age of 17, or $10 per week if he again became actively and profitably engaged in his business. Plaintiff appeals from the portion of the decree as to property settlement. "We hear the case de novo.
Plaintiff claims and offered convincing testimony to show that on numerous occasions defendant without provacation became "enraged at plaintiff, called her vile names, on several occasions struck, choked and beat plaintiff, and that on three occasions defendant threatened to kill her. The last occasion, which.caused the final separation, was on December 21, 1944, when the defendant was home on a furlough, plaintiff’s testimony in that regard being as follows:
'“A. He wanted me to discuss a matter in the bathroom; because I wanted to go out in the living room and discuss it, he became enraged and started hitting me and choking me. He struck me here (indicating) and cut a place over my eye; then he threw me to the floor and said I better say my prayers because he was going to cut my throat. At that my housekeeper started to call the police and he turned me loose and went over to her and I got out of the house and went nest door and my neighbor called the police.
“Q. What happened?
“A. The police came and took him down to the station and I went down there and the police told me it' was up to me what I wanted to do with him. So his. brother came down there so they turned bim over to his brother and the police told his brother he would be responsible for him, for Mr. Cain’s actions.
“Q. . Mr. Cain did not want to be arrested?
“A. No, he didn’t and I didn’t want to have him placed in jail over night.”
This testimony was corroborated by the housekeeper, Nettie M. Hull.
We are convinced that the plaintiff correctly computed the amount of the defendant’s contributions ■to the family upkeep from the time of the marriage until September 30, 1945, as follows:
May 9, 1936 to end of that year.. about $ 1,347.00
Year 1937 ....................about 1,700.00
“ 1938 ....................about 500.00
“ 1939 .............'.........2,015.82'
“ 1940 1,290.72
“ 1941 2,349.28
“ 1942 2,623.63
‘ ‘ 1943 allotment of $100.00 per mo. 1,200.00
‘ ‘ 1944 allotment of $100.00 per mo. 1,200.00
“ 1945 to 9-30-45 allotment of 1 $100.00 for 2 months and ■ $80.00 per month for 7 ‘months ................... 760.00
$14,986.45
The trial court by including part of the' year in which the parties were married preceding the marriage and including pay to defendant while in the service exceeding the allotment, and other items not included in the above statement, fixed defendant’s earnings at $23,997. Defendant claims that at the time of his marriage there was due him, as commissions on sales of real estate, $1,200 to $1,500, which commissions he collected and turned in to the family living expenses within a few months after the marriage, which claim of defendant is denied by plaintiff.
Defendant’s earnings being insufficient to support his household, plaintiff continued her work at the Fisher Body plant in Pontiac until the last of December, 1936, when her pregnancy compelled her to quit work. The daughter was born May 26,1937. In August, 1937, plaintiff again went to work. Her earnings have been as follows:
May 9, 1936 to December 31, 1936 at
$120.00 per month...... $ 920.00
Year 1937 ..........1.............. 432.00
“ 1938 ......................... 1,415.00
Tear 1939 .........................$ 1,500.00
“ 1940 ...;..................... 1,545.00
“ 1941 .................:....... 1,930.00
“ 1942 ..'....................... 1,936.69
<£ 1943 ......................... 2,280.00
££ 1944 ...........•.............. 2,864-45
££ 1945 to August 31, 1945........ 2,225.00
$17,048.14
Plaintiff submitted a detailed account of her expenses for the same period which may be summarized as follows: * • - ■
For household help.................. $5,107.00
For lunches and transportation...... 1,272.00
Other expenses by reason of' employment ............................. 350.00
Income tax.......................... 995.48
$7,724.48
The net difference is $9,323.66.
It will be seen that the support given by defendant was insufficient during at least the first five years of the married life of the parties. "While defendant criticized plaintiff for working out and claimed that he desired she should not work out, yet the conclusion is inevitable from all the testimony that it was a case of necessity for her to resume her employment. Defendant joined the Coast Guard October 26, 1942. He served outside of continental United States about 20% months, and has been honorably discharged. Plaintiff was still working at the time of the hearing and there is no intimation that she has ceased her employment.
The lot on which is situated the house which the plaintiff still occupies was bought in 1939. The cost of the lot and of the house that was built thereon was $5,400, all of which was furnished by the Fed eral Housing Administration. The parties moved in on July 8, 1939, and afterwards made improvements costing about $500. ‘ The mortgage at the time of hearing was reduced to about $4,500, but the parties had paid in (apparently including interest) $3,556.43 on the cost of the house and lot.
Defendant made a motion for allowance against plaintiff for use and occupancy of the house and real estate, which motion was denied by the trial court. It appears from the sworn answer of plaintiff to the motion for allowance that from October, 1945 to April 5, 1946, defendant contributed only $50 toward the child’s support and that the child sustained a severe accident, December 31, 1945, entailing a total of $110 for hospital bill, ambulance charge and doctor’s bill. The answer also states that within a few days after the entry of the decree of divorce defendant went to Florida and was there married and has since paid but little attention to his child. He was a poor provider' before entering the United States service and after his discharge is still a poof provider.
The continued use of the house is of very great importance to plaintiff and her daughter. The daughter’s interests will be better protected by the title to the residence being placed in her mother than by a decree ordering her father to pay $8 per week alimony for the daughter’s support, since we entertain grave doubts of defendant’s future compliance with any requirement to support his daughter.
If the house were sold and the incidental expenses were paid, the balance for division between the parties would be about $7,000, and under the terms of the decree appealed from plaintiff would receive about $3,500. For this amount she could not buy a suitable residence and it is to be feared that if she should buy a suitable residence and go in debt for an additional sum to buy it, she might lose her entire interest therein by reason of possible future decline in values of real estate. The trial judge realized this situation and after a prima facie showing had been made as to plaintiff’s case and an outline of the financial situation presented to him in statements and testimony, he announced as follows:
“I cannot put a woman and child out of their house without knowing they have some place to go. Of course, it is a matter of common knowledge that, there is a shortage of suitable homes in Detroit. We all know from reading the newspapers that war veterans, as well as other people, find it difficult, in fact, almost impossible, to find suitable places to live, and I think that is one of the issues in this case, much as I would like to accommodate the defendant, have him realize something on his investment, on the other hand, I cannot arbitrarily say, ‘Sell this house for $12,000 and put Mrs. Cain and her daughter out on the street. ’ I have got to know where they are going.”
Subsequent thereto a considerable 'amount of testimony was taken which does not greatly alter the situation that had been before the court when he made the above pronouncement. At the conclusion of the taking of testimony, including the interrogation of plaintiff by the court, it developed that the parties had practically agreed upon plaintiff paying defendant $2,500 and keeping the house, it being contemplated that she be awarded the house. It appeared that plaintiff was not then able to borrow the sum of $2,500, whereupon the court made a decree as heretofore recited.
The necessity for plaintiff and her daughter to be left undisturbed in the occupancy of the house is so great that we feel compelled to make an award for plaintiff different from that ordered by the decree of the trial court. The house and lot is awarded to the plaintiff as her sole property on condition that at any time within one year from the date of the entry of decreé in this- Court she pay to the defendant $500, with interest at five per cent, per annum from date of our decree, defendant to have a lien on the premises for the sum of $500. When plaintiff makes payment of the $500, the title to the real estate shall vest in her absolutely. The payments of alimony for support of the child are hereby terminated, subject to any future order of the court.
In making the above award, we consider that it must be a matter of considerable financial value to defendant to be relieved entirely of the future support of his wife. The father’s liability for the daughter’s reasonable support in case of the failure of the mother to provide such reasonable support is a matter from which the court does not .exonerate the defendant. Except for the modifications hereinbefore set forth, the decree appealed from is affirmed. A decree may be entered in this Court in accordance with this opinion. Neither party having fully prevailed, no costs of this appeal are allowed.
Carr, C. J., and Butzel, Bushnell, Sharpe, Boyles, -North, and Dethmers, JJ., concurred. | [
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North, J.
By their bill of complaint plaintiffs seek to restrain defendants from violating restrictions relative to the use and occupancy of property owned and occupied by defendants at 182 Richton avenue in the city of Highland Park. Robert E. Markland, to whom we herein refer as defendant, is a painter and interior decorator. The injunctive relief sought is that he be restrained from conducting his business at the place above designated and from making changes in the property for the purpose of enabling him to conduct a business thereon, and from erecting on the premises a sign advertising the business. The property involved is located in an area restricted to single dwelling houses ’costing not less than $2,250, and the necessary outbuildings. This restricted area covers the lots on both sides of Richton avenue and on the north side of Monterey avenue, extending three blocks in an easterly and westerly direction from Woodward avenue to Hamilton avenue. It is composed of 212 lots. Somewhat westerly from the center of this restricted area Richton avenue is intersected by Third avenue, extending in a northerly and southerly direction. The Markland property is located at the northwest corner of Richton and Third avenues. The latter thoroughfare is a one-way street restricted to southbound traffic and is heavily traveled, especially during morning hours.
The business which defendant seeks to carry on involves consulting in the selection of draperies, furniture, lamps, et cetera, and the taking of orders for such merchandise from customers. The only testimony bearing upon the number of such customers was given by defendant who estimated they would not exceed 10 a week. To facilitate the carrying on of his business, defendant cut a door and installed a small porch and steps leading to a sun-room on the Third avenue side of the property near the rear. A bay window off the dining room on the Third avenue side was converted into a French window by extending the glass to the floor level. A four-by-four signpost was erected at the rear por tion of the lot on the Third avenue side. Defendant planned to display a sign at this point about one-by-two feet in size on which would be displayed defendant’s name and a Third avenue number assigned to the property. In the dining room portion of his property defendant placed various attractive items of interior decoration, including a small amount' of furniture, draperies and lamps. The remaining portion of the house is used for private living purposes. The entrance for business purposes to the property was solely from the Third avenue side through the door which opened into the sunroom at the rear of the house on the easterly or Third avenue side.
Defendant does not keep a stock of merchandise in the housé to be purchased and either carried out or delivered therefrom; Tie uses only the dining room for showing a limited line of sample furniture, dra-‘ peries, lamps et cetera. In his opinion the trial judge said: “The room is to all appearances' simply a specially furnished - room in his home.” If purchases are made they ar.e delivered upon defendant’s order directly from the manufacturer or jobber, or are delivered later by defendant to the purchaser. •
As to the extent that activities of a commercial nature have been permitted in this restricted area, the following statement of the trial judge is substantiated by the record:
“Although the restriction applies to the northeast and southeast corners of Hamilton and Rich-ton, as well as to the other lots in the subdivision, two gas stations have been operated on these corners for a number of years. On the lot immediately east of the gas station on the southeast corner, a Mr. Schulze has operated a plumbing and heating business for about eight years and has a conspicuous sign advertising liis business on tbe side of bis house facing Hamilton avenue. In the house occupied by the defendants, a former owner operated the business of State-wide distribution of Bromo Seltzer, keeping his stock of cases in the garage and in the house, and operating a truck with an advertising sign on it from the premises. In a garage in the rear of one of the houses a tinsmith operates his business, keeping a limited stock of fabricated metal therein. In another house a drapery manufacturing business was formerly conducted. There are two or three other houses in the subdivision from which painting and decorating businesses are conducted. A thriving real estate business conducted by' a Mrs. Webster, is operated from a house across the street from defendant’s premises and ‘for sale’ signs giving that address as her place of business are placed on properties which she has listed for sale. * * * The street (Biehton avenue), however, has the general appearance of a residential street. With the exception of the two gas stations and Mr. Schulze’s plumbing sign, no obvious indications of business are to be observed, nor does the. defendant, as far as the Biehton avenue side of his property is concerned, propose to do anything which would change this general appearance.”
And after making some observations as to the present use of other properties in the vicinity and adjacent to Third avenue, the trial judge in his opinion made the following observation:
“With this over-all picture of the neighborhood in mind it must be admitted that there has been no complete or general let-down of the bars to business in this subdivision. It can not be said that there has been a substantial change in the character of the neighborhood so that it now appears to be a business district, except in the case of the two gasoline stations which have been permitted to flourish undisturbed on'property subject to the same restric tions as the defendants’. The same may possibly be said to be true in a lesser degree of Mr. Schulze’s plumbing business, and to a still lesser degree of Mrs. Webster’s real estate business. By the same token, however, a considerable number of businesses not conducted in an obtrusive or conspicuous manner have been permitted to operate for a long time without objection. This would seem to the court to amount to a limited and not unqualified waiver on the part of these plaintiffs resulting in a limited and qualified estoppel.”
It is from the conclusion of the trial judge just above indicated, as embodied in his decree, that plaintiffs have appealed. Their contention is that the trial court erred in not enjoining defendant and his wife from violating the restrictive covenants contained in the deed to the property here involved against the use thereof for business purposes.
The decree entered by the circuit judge closely restricted the manner in or the extent to which the property here involved might be used for business purposes. While the decree permitted carrying on the painting and decorating business from the premises it was permitted under strict limitations, among which were the following: no advertising signs were to be maintained on the premises, except an unlighted, inconspicuous sign not larger than 16 by 24 inches bearing only defendant’s name and the house number on the Third avenue side; no flood lights or neon lights are to be used on the exterior of any building on the premises, nor on the interior thereof so as to create illumination visible from the outside ; no merchandise shall be delivered to purchasers on or about the premises; no canopies or awnings containing advertising shall be erected on the premises; the business use of the premises shall be restricted to the part now used in connection with defendant’s business — i. e., rooms on the first floor on the Third avenue side; the room with the French window facing Third avenue shall present only the appearance of a specially furnished room when viewed from the outside, and it shall not be illuminated in excess of normal residential requirements; defendant shall not keep trucks or other vehicles with business signs parked for more than 30 minutes consecutively on or near the premises; no advertising of interior decorating business shall be published by defendant or circulated in any newspaper, magazine, or handbills.
The decree further provides that in the event defendant sells the property it shall be sold for residential purposes only and the provisions of the decree shall not be construed as a waiver of the restrictions; and further, that the decree in the instant case shall not be interpreted as determining that there has been a general change in the character of the neighborhood, or that the barrier against business in general has been lifted; and further, that “A process of stealthy attrition will not be countenanced and whatever business is conducted on the property must be confined to the Third avenue side and kept strictly within the limitations above specified.”
The trial court’s disposition of the instant case was quite in accord with our holding in Putnam v. Ernst, 232 Mich. 682. After having given the record careful consideration we are of the opinion that the decree entered in the circuit court is just and equitable, notwithstanding the contention of appellants to the contrary. The decree of the circuit court is therefore affirmed, with costs to appellees.
Carr, C. J., and Butzel, Bushnell, Sharpe, Bowles, Beid, and Dethmers, JJ., concurred. | [
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Reid, J.
The two appeals in this case were taken separately to the circuit court and from circuit court to this Court by the two defendants in a summary ouster proceeding originally brought before a circuit court commissioner for Berrien county.
Complaint to recover possession against defendants Robert Faulkner and Juanita Faulkner was filed with the circuit court commissioner after service of notice to quit. Attorney Elden W. Butzbaugh entered appearance for Robert Faulkner but no appearance was entered for Juanita Faulkner.
The deputy sheriff who made service of summons filed with the commissioner a proof of service on Robert Faulkner only; however, prior to the hearing before the commissioner he filed another return in which he certified that he had made service on both parties, part of which later return is as follows :
‘ ‘ Said service being made on Robert Faulkner in person and on Juanita Faulkner by leaving a copy thereof with her husband the said Robert Faulkner at the place of their common residence in said village of Coloma, and at the same time informed him of the contents and the nature thereof.”
It appears from the affidavit of defendant Juanita Faulkner made in the matter of her appeal to circuit court that defendant Juanita Faulkner claims such service on her was not made at the place of residence of defendants but was made at a store building owned and operated by Robert Faulkner.
The matter was set for hearing before the commissioner, testimony was taken and judgment of restitution for plaintiff ^entered. No objection was raised by attorney Butzbaugb as attorney for defendant Robert-. Faulkner as to tbe regularity or sufficiency of any pleadings or proceedings taken up to that point, nor had defendant Juanita Faulkner appeared in person or by attorney.
Within tbe time limited by statute, eacb defendant took a separate general appeal to tbe circuit court, which court on April 25, 1946 set tbe case to be beard on May 2, 1946. Attorney Butzbaugb, as attorney for eacb defendant, gave tbe attorney for plaintiff notice of eacb defendant’s appeal to circuit court. Counsel for defendants was notified of tbe time set for bearing. On tbe day set for bearing, plaintiff and bis attorney appeared in court. The court officer, Joseph S. Betcbek, testified as follows:
£<I am tbe court officer of this court. I am acquainted with Elden W. Butzbaugb. He has appeared as attorney for tbe appealing parties in both’ these cases. He was notified at the time these cases were set for bearing today. I talked to him today regarding tbe bearing of these two cases. He told me be would not appear. I asked him whether a default would be taken and be said be didn’t care.”
Motion was made by counsel for plaintiff to dismiss tbe appeals and tbe motion was granted. Orders dismissing tbe two appeals were entered and filed May*3, 1946.
Defendants make tbe following contentions:
(a) That where appeal from-a judgment of restitution-by a circuit court commissioner was filed' after tbe beginning of tbe term of court, it was error,on tbe part of tbe circuit court on the day after tbe return was filed to set tbe cause for trial 7 days later;
(b) That tbe circuit court erred in bearing tbe cause without written notice having been given of the placing of the canse on the calendar as required by 3 Comp. Laws 1929, § 14256 (Stat. Ann. § 27.985);
(c) That the circuit court erred in disposing of the appeals on an oral motion to dismiss without defendants appearing in court; and
(d) That it was error for the circuit court to dismiss the appeals under all the circumstances.
Defendant Juanita Faulkner does not on this appeal raise any question as to the sufficiency of service of snmmons upon her. She is therefore to be treated as though having been lawfully' summoned in the proceeding before the circuit court commissioner.
Defendants took separate appeals to this Court on May 6, 1946, three days after the orders of dismissal in circuit court. It is clear, therefore, that on May 6, 1946, both defendants knew of the orders of dismissal of May 3, 1946.
Defendants did not in the circuit court raise any of the questions' they no*w raise in this Court, either upon the trial, of which their attorney had actual knowledge, or by any motion to set aside the orders of dismissal or by motion for a new trial.
We do not on appeal to this Court hear objections which could have been raised in the court below but were not there raised. Wells v. Scott, 4 Mich. 347; Pardee v. Smith, 27 Mich. 33; Fowler v. McQuigg, 222 Mich. 178; Willox v. Townsend, 245 Mich. 632; Rice v. Katz, 255 Mich. 1. Other decisions by this Court of the same general purport are too numerous to require recital.
The appéals seem dilatory. The orders of the circuit court dismissing the appeals are affirmed, with costs to plaintiff against each defendant separately.
Carr, C. J., and Butzel, Bushnell, Sharpe, Boyles, North, and Dethmers, JJ., concurred. | [
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Reported at 477 Mich 280.
Cavanagh, Weaver, and Kelly, JJ. We would grant rehearing. | [
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Sharpe, J.
This is a chancery action to set aside three quitclaim deeds. It appears that in November, 1920, Olive W. Wagar, widow (now Olive W. Armstrong), and Bolland D. Weinberg became the owners of 40 acres of land in Gladwin county, Michigan. The land was partially cleared and generally considered worthless. Mrs. Wagar paid the taxes on the land for the years of 1921, 1922, and 1923. No further taxes were paid by either Mrs. Wagar or Mr. Weinberg and in 1927 the land was sold at the tax sale for the taxes of 1924. On the tax sale Wellington Wagar purchased the land and assigned the certificate to Wayne B. Wagar, his grandson and son of Olive W. Wagar. In the course of time, the auditor general executed a tax deed to Wayne Wagar. Wellington Wagar paid delinquent taxes assessed against this property as well as the current taxes until his death in 1933. While on his death bed, Wellington Wagar handed the papers pertaining to the tax purchase and tax receipts to Wayne Wagar saying, “this is my gift to you.”
On November 1, 1928, a notice of redemption was served on R. D. Weinberg in Gladwin county by a deputy sheriff of Genesee county and on Olive Wagar Armstrong by registered letter on February 11, 1929, by the sheriff of Gladwin county. Rolland D. Weinberg died April 27, 1930, leaving as heirs the plaintiffs herein. Wayne Wagar first learned of oil prospects in the above mentioned land during the month of December, 1936, and being advised of possible defects in his title to the land was advised to procure a quitclaim deed from his mother and quitclaim deeds from Bertha Richeson, Donald W. Weinberg and Daniel Weinberg, adult heirs of Rolland D. Weinberg. He was also advised to procure from the above mentioned heirs certain affidavits showing that R. D. Weinberg and Rolland D. Weinberg were the same person.
In order to secure the above mentioned deeds and affidavits, the services of Gordon M. Smith were procured and he on or about the 28th day of January, 1937, procured a quitclaim deed from Bertha Richeson, formerly Bertha Weinberg, naming Wayne Wagar as grantee; and on the same date a similar deed from Donald W. Weinberg and Helen I. Weinberg, his wife, naming Wayne Wagar as grantee; and on January 29, 1937, a similar deed was procured from Dan "Weinberg and Rutb Y. Weinberg, bis wife, naming Wayne Wagar as grantee. Separate affidavits were secured from Donald W. Weinberg and Dan Weinberg to tbe effect tbat Rolland D. Weinberg and R. D. Weinberg were tbe same person. Tbe above mentioned deeds and affidavits were recorded in tbe office of tbe register of deeds in Gladwin county.
In April, 1937, plaintiffs filed a bill of complaint in tbe circuit court of Gladwin county, tbe purpose of wbicb was to set aside and cancel tbe quitclaim deeds, and alleged tbat tbe same were procured through fraud, deceit and misrepresentation upon tbe part of Gordon M. Smith.
When tbe cause came on for trial, testimony was taken from all known witnesses except Leonard L. Ealy who was a witness to tbe Donald W. Weinberg deed and Elsie Carlisle who was a witness to tbe Dan Weinberg deed. Tbe trial court held tbat tbe statutory notices to redeem were not complied with as is required by 1 Comp. Laws 1929, § 3535, and tbat tbe quitclaim deeds were invalid because fraudulently procured. Tbe decree entered provided tbat plaintiffs are tbe owners of a one-balf undivided interest in tbe land, and tbe minor plaintiffs entitled to one-eigbtb of tbe proceeds from all oil removed from tbe land, and each of tbe adult plaintiffs entitled to one sixty-fourth of tbe money from oil produced from tbe land.
Defendants Wagar and Armstrong appeal. It is tbe claim of plaintiffs tbat tbe tax notices served upon Rolland D. Weinberg and Olive W. Armstrong were defective in tbe following respects:
(a) Because tbe signature of Wayne Wagar bad been typed on the notice, instead of being written in longhand;
(b) Because the place of business of Wayne B. Wagar was given as Gladwin, Michigan, whereas he was in school at Boston, Massachusetts, at that time;
(c) Because Rolland D. Weinberg was designated in the tax notice as R. D. Weinberg;
(d) Because the return of service showed that the notice was served by a deputy sheriff of Genesee county in Gladwin county; and
(e) Because the notice gave the year for which the taxes were sold as 1927 instead of 1924.
In Stockwell v. Curtis, 279 Mich. 388, a notice to redeem was served upon the proper party by an attorney. We there said, “Substantial compliance with the statutory requirements in such matters is not sufficient.”
See, also, McVannel v. Pure Oil Co., 262 Mich. 518; Teal Lake Iron Mining Co. v. Olds, 178 Mich. 335; Littlefield v. Petrick, 250 Mich. 437; Fitschen v. Olson, 155 Mich. 320.
In the case at bar the return of service shows service of notice on Ronald D. Weinberg by a deputy sheriff of Genesee county in the county of Gladwin. Such service being made by a deputy sheriff outside of the jurisdiction where he may lawfully serve such papers is a nullity and is not in compliance with the requirements of 1 Comp. Laws 1929, § 3535.
The next question presented relates to the finding of the trial judge that the quitclaim deeds are invalid. The facts in connection with this matter are that Gordon M. Smith, a former sheriff of Gladwin county, was selected by the defendant to procure certain affidavits and quitclaim deeds from the adult heirs of Rolland D. Weinberg. On or about the 28th day of January, 1937, he called at the home of Donald Weinberg in Flint where Donald Weinberg signed the affidavit and Donald Weinberg and wife signed the quitclaim deed. Smith then called upon Bertha Richeson, also living in Flint, and had her sign a quitclaim deed which also contained a statement that Bertha Weinberg was the daughter of Rolland D. Weinberg also known as R. D. Weinberg. The following day Smith called upon Dan Weinberg and had him sign an affidavit and he together with his wife signed a quitclaim deed. At the time Mrs. Richeson signed the quitclaim deed, Mr. and Mrs. Alex Smith and Donald Weinberg were present. It also appears from the record that Mrs. Richeson graduated from high school with Gordon M. Smith and is a housewife; that Donald Weinberg has an eighth grade education and works in a factory; and that Daniel Weinberg has a twelfth grade education and is a bread salesman.
It is the claim of plaintiffs that when Gordon M. Smith called at their respective homes, he asked each of them to sign the above mentioned affidavit; that they signed a second paper, without reading it, believing it to be a copy of the affidavit as Gordon M. Smith told them it was; that at the time the papers were signed, oil had been discovered within a half mile of the mentioned land; that Gordon M. Smith knew this fact yet failed to give this information to any of plaintiffs; and that they relied upon what Gordon M. Smith told them as they considered him a friend and old acquaintance.
The burden of proof of proving the fraud alleged in this cause is upon plaintiffs. Hutchinson v. Poyer, 78 Mich. 337. Fraud will not be presumed. Graham v. Graham, 184 Mich. 638. It must be proven. Steele v. Shaffer, 241 Mich. 632.
In Sanborn v. Sanborn (syllabus), 104 Mich. 180, we held:
“A deed will not be set aside at the suit of a wife who joined with her husband in its execution to secure Ms creditor, which indebtedness tbe wife had advised ber husband to secure, on the ground that she was ignorant of tbe contents of tbe deed, where it appears that no misrepresentations were made to ber at tbe time she executed tbe deed, and that she made no inquiry as to its form or contents.”
In Sponseller v. Kimball, 246 Mich. 255, 260, this court said:
“Tbe stability of written instruments demands that a person who executes one shall know its contents or be chargeable with such knowledge. If be cannot read, be should have a reliable person read it to him. Ilis failure to do so is negligence which estops him from voiding tbe instrument on tbe ground that be was ignorant of its contents, in tbe absence of circumstances fairly excusing bis failure to inform himself. 6 R. C. L. pp. 624, 625; Warren v. Federal Life Ins. Co., 198 Mich. 342; Weidner v. Northway Motor & Manfg. Co., 205 Mich. 583.”
Tbe testimony in this cause relating to tbe signing of tbe quitclaim deeds is clearly in dispute, but an examination of tbe record discloses that tbe affidavits signed were typewritten and tbe one signed by Donald W. Weinberg reads as follows:
“Donald W. Weinberg of Flint, Michigan, being duly sworn deposes and says that be is tbe son of Rolland D. Weinberg who in 1921 was a widower, and during bis lifetime was commonly known as R. D. Weinberg, and in a number of instances used tbe name of R. D. Weinberg in transferring property and other business.”
The affidavit signed by Dan Weinberg was similar to the above. It is also to be noted that tbe wives of Donald and Daniel Weinberg did not sign either of the above affidavits, but did sign tbe quitclaim deeds and that Mrs. Richeson signed a quitclaim deed. The quitclaim deeds were in the usual printed form. In our opinion had plaintiffs made the slightest observation they must have discovered the difference between the deed and the affidavit. There was nothing in the deed to lead one to believe that it was a copy of an affidavit.
In Jacobsen v. Whitely, 138 Wis. 434 (120 N. W. 285), the court said:
“It is an unsavory defense for a man who by false statements induces another to act to assert that if the latter had disbelieved him he would not have been injured. McClellan v. Scott, 24 Wis. 81, 86; Tyner v. Cotter, 67 Wis. 482, 491 (30 N. W. 782). Nevertheless courts will refuse to act for the relief of one claiming to have been misled by another’s statements who blindly acts in disregard of knowledge of their falsity or with such opportunity that by the exercise of ordinary observation, not necessarily by search, he would have known. He may not close his eyes to what is obviously discoverable by him. Northern Supply Co. v. Wangard, 117 Wis. 624 (94 N. W. 785, 98 Am. St. Rep. 963; Kaiser v. Nummerdor, 120 Wis. 234 (97 N. W. 932), and cases there cited; Miller v. Hackbarth, 126 Wis. 50, 52 (105 N. W. 311).”
In Be Dosker’s Estate, 284 Mich. 597, we said:
“There is no merit to defendant’s claim that the indorsement was void because of fraudulent misrepresentations. By the exercise of the slightest powers of observation, it was apparent that the note first indorsed provided. * * * There is no claim that Mr. Dosker was prevented from reading the notes.. * * * He thus had every opportunity to examine the notes carefully and would have no right to rely on representations so plainly and obviously contrary to the provisions of the notes. There is no showing of fraud and the indorsement was valid and binding.”
The decree of the circuit court is reversed and a decree will be entered here in accordance with this opinion. Defendants may recover costs against plaintiffs except as against the minors who are plaintiffs herein. Said minors may recover costs against defendants.
Wiest, C. J., and Butzel, Bushnell, Potter, Chandler, North, and McAllister, JJ., concurred. | [
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Chandler, J.
Plaintiff filed a bill for separate maintenance based upon an alleged common-law marriage, alleging extreme cruelty, desertion and nonsupport. Defendant answered, denying the allegations of the bill, and in addition, filed a cross-bill praying for a divorce.
The facts present the question as to whether the parties were married, it being plaintiff’s claim that a common-law marriage was established. With reference thereto, the record shows that a ceremonial marriage was solemnized in 1910 and that thereafter they lived together as husband and wife until the year 1914 when they separated and later, about the year 1917, defendant secured a divorce from plaintiff. After the separation he went west where he remained for approximately a year and a half. He then returned and became employed in the city of Saginaw where he worked for some two years. During this period plaintiff and defendant met at various times, either in Saginaw or Fostoria where plaintiff was then living, and usually roomed to getlier for the night or longer depending upon the duration of the visit, it being shown that defendant frequently spent the week end with plaintiff in Fostoria and she in turn visiting him in Saginaw.
Plaintiff eventually moved to Flint and purchased a home. In April, 1918, defendant moved into the house, the parties living together thereafter until July, 1930. During this period of 12 years, they were generally recognized in the community and by their friends as husband and wife. Defendant contributed to the support of the home. Plaintiff executed a mortgage at defendant’s request as his wife. At the time of the war, she executed documents as his wife in order that he might be excused from military service. Defendant at one time filed a bill for divorce on the theory that a common-law marriage existed, and in the present case prayed for a divorce in his cross-bill. In addition, a child was born who was 11 years of age at the time the bill of complaint in the instant case was filed.
The trial court found that a common-law marriage existed; that defendant had been guilty of desertion and nonsupport as alleged in plaintiff’s bill, and granted a decree in accordance therewith.
It is not denied that the parties cohabited for some 12 years, during which period they represented themselves as, and were known as, husband and wife. Defendant, however, disputes the finding of the trial court on the theory that there was no agreement between the parties at any time to take each other as husband and wife.
An examination of the testimony of both parties reveals inconsistencies in each instance. Plaintiff testified on direct examination that there was an agreement that they would live together as husband and wife. However, in response to this question on cross-examination, “And there was never any promise made on his part or your part were there?” she answered: “Never was mentioned.”
Defendant’s testimony, also inconsistent, reveals that he represented plaintiff as his wife and that he thought she was his wife, not because they had so agreed between them, but because, “I supposed after anybody lived together so long they were common-law wife, husband and wife. ’ ’
We will first consider the question of marriage. The acts of the parties support plaintiff’s claim of a common-law marriage. Her execution of a mortgage as his wife at his request; his claim for exemption from military service in 1918 for the reason that plaintiff was his wife and her signing of such a document as his wife; his. filing of a bill for divorce in 1933 which was later dismissed for want of prosecution; and the filing of a cross-bill herein praying for a divorce, persuade us, as they did the trial court, that an oral contract of marriage per verba de prcesenti was made between the parties, and consummated by cohabitation and supported by the parties holding themselves out to the public as husband and wife and the rearing of a child, the issue of such relationship. Long v. Long, 217 Mich. 211.
The trial court awarded plaintiff a decree of separate maintenance, the custody of the child, and dismissed defendant’s cross-bill. The record justifies the decree so entered.
Decree affirmed, with costs to plaintiff.
Wiest, Bushnell, Sharpe, Potter, North, and McAllister, J J., concurred. Butzel, O. J., did not sit. | [
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North, J.
Upon this record, as I view it, the judgment entered in the circuit court should be affirmed. I think the trial judge was right in holding that each of the four transactions out of which this litigation arises was a “single transaction.” In his opinion Mr. Justice Sharpe holds that in each there were two separate transactions; and citing some authorities, he holds that because it was not a single transaction, plaintiff is barred of recovery under the statute of frauds.
Obviously there can be no hard and fast rule because of which it must be said that every transaction of this character is a “single transaction” or is not. Instead the character in this respect of each transaction should be determined in the light of the facts by which it is surrounded. The facts in the instant case in brief are as follows: Defendants sought to obtain money of plaintiff’s assignor for the benefit of a corporation of which defendants were stockholders and officers. The transactions out of which this litigation arises are of the same character as the transactions through which these same defendants secured funds from the First Income Trading’ Corporation, with which plaintiff herein was closely identified. Unquestionably the transactions with the First Income Trading Corporation were on the basis of individual liability of these defendants who were at that time advised that the various transac tions would not be closed on the basis of the financial responsibility of the Tire Guard Company. While there is some dispute in the testimony in the instant case, there seems to be little room for doubt that the transactions on which plaintiff bases his right to recover were closed on the strength of the individual liability of defendants and that they were well aware of that fact. Defendants signed the written memoranda of the part of the transactions which plaintiff now seeks to enforce. In consideration of these undertakings plaintiff’s assignor paid to the corporation the amounts fixed as the purchase price of the stock of the corporation which stock defendants agreed in writing to purchase from plaintiff’s assignor. On this record it would be absurd to assert that any portion of these respective transactions would have been consummated if defendants as individuals had not bound themselves to the undertaking evidenced by the written memoranda. The fair and seemingly necessary conclusion sustained by this record is that a portion of the consideration which induced plaintiff’s assignor to part with its money was defendants ’ written agreements to purchase the stock from plaintiff’s assignor, and in three of the four transactions such purchase was to be at an increased price. The result in each instance was a single transaction of a tri-lateral character. The proven facts negative the conclusion that one portion of the respective transactions was wholly independent of the other. In such a ease justice should not be defeated by resort to the inapplicable theory that incident to each of these four dealings there were two separate and independent transactions.
There was part performance of each of these four contractual transactions, and further, in the con summation of each there was a memorandum in writing signed by defendants which sufficiently recited the part of the undertaking which they obligated themselves to perform. Thus there was full compliance with the requirements of the statute of frauds, the pertinent provision of which reads:
“A contract to sell or a sale of any goods or choses in action of the value of one hundred dollars or upwards shall not be enforceable by action, unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract or sale be signed by the party to be charged, or his agent in that behalf.” 2 Comp. Laws 1929, § 9443 (Stat. Ann. § 19.244).
We should be more concerned with reaching a right result than in following decisions from other jurisdictions which, at least as applied to the instant case, seem not to be sound. While plaintiff relies upon Beverly v. Richards, 255 Mich. 508, it should be noted that decision therein did not turn upon the question of law now before us. But the following aspect of the Beverly Case is somewhat persuasive. Therein the defendant sold stock of a corporation in which he was interested both as a stockholder and creditor; and incident to such sale he orally agreed if the corporation did not pay certain specified dividends “he would pay the same, and she (the purchaser) could have her money back any time she wanted it.” The case was decided on other grounds, but there is no intimation in the opinion that in the absence of other grounds of defense, plaintiff could not have recovered on defendant’s agreement to purchase from plaintiff the stock of the corporation which he sold to her. On this phase of the Beverly Case, Justice Wiest who wrote for the court said:
“There is no merit in defendant’s claim of want of consideration for the promise to repurchase the stock. Authorities are to the effect that, where one sells stock and promises the purchaser to repurchase, the transaction is single and there is a sufficient consideration to take the promise out of the statute of frauds.
“Defendant claims that the purchase was made of the corporation, and, therefore, no consideration passed to him. If defendant made the promise in order to induce the purchase that he might obtain the money for stock held by him (as collateral to a loan to the corporation), the consideration was present, and the fact that the issue was by the company out of stock held by him (as collateral) and the money came to him made the promise binding*. ’ ’
The following is a holding from one of the New York courts:
“A promise by the directors of a corporation, in order to induce a woman to purchase from the corporation a number of its shares of stock, that in the event of the corporation not declaring an eight per cent, annual dividend on the stock they would pay to her semi-annually, as long as the corporation should exist, such an amount of money as might be necessary to malee up the eight per cent, dividends on the stock, is not a promise to answer for the debt, default or miscarriage of the corporation, and is not within the statute of frauds. The payment by the promisee of the purchase price of the stock furnishes a good consideration for the directors’ promise.” Crook v. Scott (syllabus), 65 App. Div. 139 (72 N. Y. Supp. 516).
“If an officer of a corporation orally promises a prospective purchaser of the corporate stock to repay the purchase price at any time and the purchaser acts upon the promise, the agreement is an original contract, and is not within the statute of frauds.” Trenholm v. Kloepper (syllabus), 88 Neb. 236 (129 N. W. 436).
“Where a party is induced to purchase stock in a corporation under the promise and agreement by the president, director, and stockholder of the corporation that at any time he wanted his money back he would pay it to him with interest, it is an original undertaking.” Fischer v. Bashwitz (syllabus), 152 Okla. 231 (5 Pac. [2] 356).
“An agreement on the part of the seller of securities, or on the part of the broker of the purchaser, to buy back the securities from the purchaser at a later date if the purchaser should become dissatisfied with them or for any other reason, is not within the scope of the statute of frauds, and is enforceable even though oral. The original sale and the agreement to repurchase are regarded as an entire contract and not as two separate and independent ones, the latter being in effect an agreement to rescind the former. The statute, therefore, is inapplicable. This is true whether the agreement to repurchase is made by the seller of the stock or by a broker who has purchased it on behalf of his customer and has no interest in the sale except as broker. ’ ’ Meyer’s Stock Brokers and Stock Exchanges (1st Ed.) p. 246.
The above quoted text is sustained by the following cases cited by the author: Johnston v. Trash, 116 N. Y. 136 (22 N. E. 377, 5 L. R. A. 630, 15 Am. St. Rep. 394); Fitzpatrick v. Woodruff, 96 N. Y. 561. Counsel for appellants are of the opinion that the two cited cases are in conflict with Gainsburg v. Bachrack, 241 App. Div. 28 (270 N. Y. Supp. 727); affirmed 266 N. Y. 468 (195 N. E. 158). In this we cannot agree. Instead, in the later case the New York court quoted from Morse v. Douglass, 112 App. Div. 798 (99 N. Y. Supp. 392), the following:
“If there was but a single agreement involved in the whole transaction the statute does not apply. If, on the other hand, there were two separate and distinct contracts — one, that, the plaintiff would buy the stock from the principal who the defendant represented, and the other, that the defendant would buy the stock back from the plaintiff at any time he became dissatisfied concerning it and refund him the money — then the statute would apply. ’ ’
Under the record in the Gainsburg Case the New York court found there were two separate and distinct contracts, and therefore the statute of frauds barred recovery; but under the facts in the Johnston Case (as in the instant case) there was only one transaction and recovery was not barred by the statute. In the Johnston Case the court said:
“When an agent, by an oral contract, sells and delivers the goods of a disclosed principal, his personal oral warranty of quality is not a contract independent of the contract of sale, but is a part of it, and one consideration is sufficient to support the sale and warranty. The oral contract of the defendants, that they would purchase for the plaintiff in the market at market rates the bonds for the usual compensation, and in case he should thereafter become dissatisfied with the bonds, that they would, on demand, take them off his hands at what they cost him, was a single contract.”
I am in accord with Mr. Justice Sharpe that under the record in the instant case the agreements to purchase this stock from plaintiff’s assignor were the individual agreements of appellants. And for the reason above indicated these agreements should be held to be binding and enforceable. Judgment to that effect entered in the circuit court is affirmed, with costs to appellee.
Wiest, Potter, and McAllister, JJ., concurred with North, J. | [
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Bushnelh, J.
The parties were married on October 20, 1919, and separated on December 24, 1943. Five children born as a result of this union are living, the oldest being 25 years old and the youngest, 17. Plaintiff Bernard Kanka is now 51 years old and defendant Evelyn Kanka, 48.
When the report of the friend of the court was filed the husband was employed, his earnings averaging $94.87 a week, and the wife was employed with an income of $32 a week, $10 of which she received from her brother who rented a room in the home. The parties are purchasing' a 5-room home on land contract, on which there was due at the time, of trial an unpaid balance of about $1,000, payable at the rate of $25 per month- The equity of the parties in the home was considered to be worth about $5,000.
Plaintiff’ filed a bill of complaint in which he charged his wife with extreme and repeated cruelty, alleging that she would frequently fly into fits of rage and anger without provocation, abuse him in the presence of the children, refuse to associate with him in social activities, neglect the ordinary and usual household work, and refuse to cook his meals. He claimed that on several occasions she threatened to poison him and persisted in turning the minds of the children, against him by falsely charging that he associated with other women. In her answer the wife denied all these charges and insisted that plaintiff was guilty of adultery. She alleged, that she had not voluntarily cohabited with him since her discovery .of his act of adultery. She also charged her husband with drinking to excess, and with desertion. Notwithstanding these counter-charges the wife did not seek a decree of divorce, but asked that the husband’s bill of complaint be dismissed.
Plaintiff’s proofs consisted of his own testimony and that of the husband of plaintiff’s sister. The conclusion of this witness was that plaintiff was a “sincere, honest, good fellow.”
Defendant’s testimony in her own behalf was corroborated by two of her sons. A friend who was a frequent visitor in the home testified favorably regarding the housekeeping ability of the defendant and the manner , in which she looked after the needs of her family.
The husband of the other woman was subpoenaed as a witness by the defendant. His testimony, however, did not substantiate defendant’s charge of adultery.
The trial judge concluded that plaintiff had made out a case of extreme cruelty. The decree of divorce granted custody of the minor daughter to the wife and awarded $10 a week for her support, provided, however, “she continues in school and makes satisfactory progress. ’ ’ All accrued alimony was cancelled and the home, owned jointly by the parties, with its contents, was awarded to the defendant as her sole and separate property. Plaintiff was ordered to pay an attorney fee of $100 to defendant, $1 in lieu of dower, and any rights that either party may have had in insurance contracts of the other party were extinguished.
The trial judge wandered far afield in his comments on the testimony and we are unable to find support for the conclusion reached in his opinion.
In our review of the testimony de novo, we are unable to conclude that plaintiff sustained the burden of proof. Furthermore, because of plaintiff’s own. acts, lie is not entitled to equitable relief. The situation disclosed by this record is somewhat analogous to that described in Brewer v. Brewer, 295 Mich. 370, and Lieberwitz v. Lieberwitz, 314 Mich. 686. What was quoted in the Brewer Case from Cooper v. Cooper, 17 Mich. 205, 210 (97 Am. Dec. 182), is equally applicable here.
“ ‘The law7’ does not permit courts to sever the marriage bond, and to break up households, merely because parties, from unruly tempers or mutual wranglings, live unhappily together. It requires them to submit to the ordinary consequences of human infirmities, and of unwise selections, and the misconduct which will form a good ground for a legal separation must be very serious, and such as amounts to extreme cruelty, entirely subverting the family relations by rendering the association intolerable.’ ”
See, also, Trombley v. Trombley, 313 Mich. 80.
The decree is vacated and «one may be entered here dismissing plaintiff’s bill of complaint, with costs to appellant, to which may be added ■ the attorney fee and costs allowed by the circuit court.
Carr, C. J., and Butzel, Sharpe,' Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Boyles, J.
This case involves a right of way which plaintiffs claim to have over certain land of the defendants. The map attached hereto shows the physical aspects of the case. Plaintiffs own certain land in the city of Otsego, Allegan county, lying, north of Water street, or north of a line extended west from the north boundary of Water street. These parcels are designated on the map by the letters A, B, G and D. Defendants own the parcel south of Water street, indicated on the map by “Bancroft to Spencer, July 15, 1943.” Plaintiffs claim the right to' an easement along the westerly boundary of defendants’ property, adjacent to the Grrable property. According to the testimony, a sidewalk was constructed along the west boundary of the Spencer property at the time it was owned by the Bancrofts. This is the passageway between Water street and Allegan street, along the western boundary of the Spencer property, that is here involved. Obstructing it, the defendants Spencer erected a barrier and denied plaintiffs the use of this passageway, wherefore the plaintiffs filed the bill of complaint in the instant case to restrain the defendants from interfering with their claimed right of way. The trial court, after hearing the ■proofs, held that plaintiffs had not shown they had a right of way, either by grant or by prescription, and entered a decree accordingly from which plaintiffs appeal. They make no claim of a right of way by necessity, but claim an easement by'grant, rely ing on certain conveyances, and reservations therein. Plaintiffs also claim an easement “by virtue of 15 years and more of user or dedication.” As to that claim, however, there is an absence of sufficient proof of a continuous, uninterrupted and adverse use for 15 years or more necessary to establish an easement by prescription, and the circuit judge properly so found. Menter v. First Baptist Church of Eaton Rapids, 159 Mich. 21; Roberts v. Wheelock, 237 Mich. 689; Burling v. Leiter, 272 Mich. 448 (100 A. L. R. 1312).
In 1936 the State Savings Bank, of Otsego, was the owner in fee simple of all the land now owned by plaintiffs and defendants, with the exception of the “Carroll” parcel. "Water street, as originally platted, extended from North street westerly to the eastern boundary of the ‘ ‘ Gray-Ledbetfer ’ 5 parcel. In 1941 the city acquired title for 50 feet in width across the Gray-Ledbetter parcel, and right of 'way for extension of Water street to the west for a distance of 243.75 feet.
On January 29, 1936, the bank conveyed that part of its land which is now owned by the defendants, the “Bancroft to Spencer” parcel, to the Bancrofts. The deed recited:
“Subject, however, to a north and south right of way over the above property to provide ingress and egress to property owners whose property lies north and northwest of the property herein conveyed. ’ ’
After the above conveyance to the Bancrofts the bank remained the owner of the land adjoining on the north and northwest, namely, the Rush A, B, C, D and Myers A, B, C parcels, until October of that year.
On October 17, 1936, the bank conveyed to the Bancrofts the Myers B and C parcels, “excepting right of way for extension of Water street if extended, and reserving rights of ingress and egress to adjoining landowners.”
On August 31, 1938, the bank conveyed to Rush the Rush A, B and D parcels, shown on the map, by warranty deed, without any exceptions, reservations, or express grant or mention of any right of way.
Ón June 13, 1939, the Bancrofts conveyed to plaintiffs Myers the Myers B parcel, as shown on the map, said deed reciting, “excepting right of way for extension of Water street if extended, and reserving right of ingress and. egress to adjoining landowners.”
On June 21, 1941, the bank conveyed to Rush the Rush 0 parcel, as shown on the map, without mention of any exceptions, reservations, express grant or mention of any right of way.
On July 15, 1943, the Bancrofts conveyed to the Spencers the “Bancroft-Spencer” parcel, reciting in the deed:
“Subject, however, to a north and south right of way over the above property to provide ingress and egress to property owners whose property lies north and northwest of the property herein conveyed. ’ ’
On June 16, 1945, the bank conveyed its remaining parcel, Myers A, to the plaintiffs Myers, reciting:
“This deed reserves the right of ingress and egress to adjoining landowners.”
On October 13, 1945, the Bancrofts conveyed to the plaintiffs Myers the Myers 0^ parcel, the deed reciting, “reserving right of ingress and egress to landowners.”
Summarizing the situation as shown by these various instruments, prior to January 29, 1936, the bank was the sole owner of all the property now owned by the plaintiffs and defendants, except Carroll who owns property north of a line extended west from Water street and whose property is, therefore, “north and northwest” of the property conveyed by the bank to the. Bancrofts. The first conveyance of property by the bank, the one to the Bancrofts conveying to them the property now owned by the defendants, on January 29, 1936, recited:
“Subject, however, to a north and south right of way over the above property to provide ingress and egress to property owners whose property lies north and northwest of the property herein conveyed. ’ ’
The purpose of this reservation becomes plain when the circumstances are considered. The bank still owned property north and northwest of the property conveyed — north of Water street. Residents north of Water street had been going to and from Allegan street either by crossing the land of Mrs. Grable or the land deeded to the Bancrofts, or both. This was their shortcut to Allegan street, instead of going the roundabout way east on Water street to North street, then south on that street. The bank sought to protect a right of way for its remaining property and for other property own'ers north and northwest of the property then conveyed to the Bancrofts, now owned by the defendants. Thus, the' bank reserved an easement across the Bancroft land, -which the Bancrofts subsequently reserved in conveying the same to the Spencers, and which land thereupon became subservient to the dominant tenement retained by the bank in its re- maim’up- land north of Water street. A similar situation arose in Akers v. Baril, 300 Mich. 619, where the Court (syllabi) held:
“The reservation of an easement of way apparently for the benefit of all of grantor’s remaining property adjacent to such right of way and existing at the time of the sale of the remaining property cannot subsequently be extinguished by the former grantor. * # *
“An easement will never be presumed to be a personal right where it can be construed as appurtenant to some estate, notwithstanding the silence of the deed.
“Where an owner conveys part of his land and reserves an easement over it, without specifying that such easement is to be appurtenant to land retained by him, the surrounding circumstances,* including the adjacency of the way to the land retained, may be considered by the court in- order to ascertain the intention that the easement was intended to be appurtenant thereto;
“Easement of way reserved by grantor who was the owner of parcels of land adjacent to such easement is construed as appurtenant to such adjacent and retained lands although such easement is not specified in the reservation as being appurtenant.”
See, also, the cases cited and quoted in the latter part of this opinion.
It is apparent that on January 29, 1936, the Ban-crofts took the property now owned by the Spencers, subject to an easement over their property, reserved by the bank. On July 15,1943, the Spencers, defendants herein, took this same property from the Bancrofts, subject to the same easement. This was not a personal right, held solely for the bank, or for the Bancrofts. It was appurtenant to the dominant estate — the property owned by the grantor bank, north and northwest of the property thus conveyed. Akers v. Baril, supra; Collins v. Stewart, 302 Mich. 1. In the latter case, the Court had for consideration a situation somewhat similar to the case at har, except that the ultimate grant expressly conveyed an easement. The Court (syllabi) held:
“An easement will not be presumed to be a personal right where it can be construed as appurtenant to some estate.
“Where one conveys land reserving the perpetual right of way over a .part of the same, the right of way thus reserved is appurtenant to that portion of the land retained by the grantor.
“The word ‘heirs’ is not necessary to create an easement running with the land.
“The omission of words of inheritance from the reservation of an easement does not establish an easement in gross to terminate with the death of the grantor who reserves the easement.
“Words of ^inheritance need not be used when reserving an easement appurtenant, and it will pass to the heirs or assigns of the owner of the dominant tenement. ’ ’
This brings us to the question whether this easement, reserved by the bank in 1936 and by the Bancrofts in 1943, has passed to, and continues as an easement or right of way possessed by plaintiffs across the Spencer property either (1) by express grant, or (2) by an easement appurtenant, one which runs with the land, without express mention in a conveyance of the dominant estate. As to the first part of this question, there can be no doubt. None of the deeds of conveyance from the bank or the bank’s grantees to plaintiffs herein, covering property north or northwest of Water street, expressly conveyed any right of way over the property now owned by the Spencers, Some of those conveyances were made subject to a right of ?ay, but- none ex pressly conveyed an easement to the plaintiffs as grantees. An easement is an interest in land. Jeffries v. Union Trust Co., 248 Mich. 652. An easement may not be “created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing.” 3 Comp. Laws 1929, §13411 (Stat. Ann. §26.906).
In the absence of a way of necessity or by prescription, plaintiffs ’ claim of an easement must depend upon whether such easement passed to them as an incident of the conveyances to them by, or from, the owner of the dominant estate. As we have said, the right of an easement across the property now owned by the Spencers, reserved by the bank was not personal to the bank. It was appurtenant to the dominant estate owned by the bank.
“A reservation in a deed of a tract of land abutting on a highway, of a perpetual right of way through it to enable the grantor to reach the highway from a parcel of land in the rear of that conveyed, creates an easement appurtenant to the uneonveyed land.” Lathrop v. Elsner (syllabus), 93 Mich. 599.
“The owner of a building, the lower story of which was divided by a permanent partition wall into two stores, within one of which a stairway led from the street to the upper story, and into a hall, from which doors led into rooms over each store, conveyed the half of the building within which the stairs were built, and inserted in the deed a clause reserving to the grantor the right to use said stairs and hall in common with the owners of the premises conveyed. And it is held that the reservation created an easement appurtenant to the premises retained by the grantor, which right passed to a subsequent grantee of the said premises.” Walz v. Walz (syllabus), 101 Mich. 167.
“Was the sale void because the right of way in the alley was not specifically sold and described in the sheriff’s deed? We do not understand how plaintiff has any cause for complaint in this regard. If the easement was of value, and was not, sold, it still belongs to her, free from the mortgage, which was satisfied by the sale.1 But it seems clear that this easement was appurtenant to the dominant estate, and a description of it was unnecessary, and that it was effectually conveyed as appertaining to the lands described.
“ ‘Where an easement is annexed as appurtenant to land, it passes as an appurtenance, with a conveyance or devise of the dominant estate, and need not be specifically mentioned in the deed or will.’ 14 Cyc. p. 1184.” Flax v. Mutual Building & Loan Association of Bag County, 198 Mich. 676, 688, 689.
In Smith v. Dennedy, 224 Mich. 378, after quoting many authorities, Mr. Justice Fellows writing for the Court said (pp. 383, 384):
“Under the above authorities we are persuaded that we should hold that the easement was appurtenant. It was acquired by prescription, not under the agreement or deed of March 15,1871, but against any rights of the parties to such agreement; it was of no value except as it was used in connection with the premises then owned by Boss and he had acquired it as ‘owner.’ Being appurtenant it run with the land and passed to defendant Dennedy under the deed to him.”
“It is a general rule of the law of easements that where the owner of two tenements sells one of them, the purchaser takes the portion sold with all the benefits and burdens which appear at the time of the sale to belong to 'it as between it and the property which the vendor retains.” Smith v. Dresselhouse, 152 Mich. 451, 454.
“When, the owner of an entire estate makes one part of it visibly dependent for the means of access upon another, and creates a way for its benefit over the other, and then grants the dependent part, the other part becomes subservient thereto, and the way constitutes an easement appurtenant to the estate granted, and passes to the grantee as accessorial to the beneficial use and' enjoyment of the granted premises.” Bean v. Bean, 163 Mich. 379, 397.
“Counsel for defendants contend that plaintiff did not acquire the way because such easement is neither mentioned nor conveyed in the deed by which he holds title to the land, nor in the deeds of his immediate predecessors. Specific mention of the easement appears in the several mesne conveyances up to 1910, and after that omitted. The easemer as an incorporeal hereditament passed to each owner of the land without specific mention thereof in conveyances. Being attached to the estate, and not to the person of the owner of- the dominant estate, the easement followed the estate into the hands of subsequent purchasers without specific mention in deeds.
“As stated in 19 C. J. p. 935:
“ ‘Where an easement is annexed as appurtenant to land either by grant or prescription, it passes as an appurtenance with a conveyance or devise of the dominant estate, although not specifically mentioned in the deed or will, or even without the use of the term “appurtenances,” unless expressly reserved from the operation of the grant.’ ” Greve v. Caron, 233 Mich. 261, 265, 266.
“The further query arises whether the easement on the Smith property in favor of the bank property passed to the bank by the foreclosure deed given March. 12, 1935. The easement, by the very words of its creation, was not personal or in gross, but was appurtenant to the bank property and would pass with the. title. The language creating the easement, hereinbefore quoted, shows that the right of way was for the use of the bank property without regard to whom its owners might be. * * * It has been frequently held that a deed of the land will carry with it an easement appurtenant, created expressly by deed, although it is not specifically mentioned in the conveyance.” First National Trust & Savings Bank v. Smith, 284 Mich. 579, 584, 585, 588.
See, also, Longton v. Stedman, 182 Mich. 405, and St. Cecelia Society v. Universal Car & Service Co., 213 Mich. 569.
We do not consider that the distinction between continuous and noncontinuous easements, referred to in Burling v. Leiter, supra, and Dimoff v. Laboroff, 296 Mich. 325, is controlling of decision here.
Plaintiffs have a right of way over the parcel owned by the defendants by virtue of said parcel being the servient tenement. This easement attached to plaintiffs’ parcels when reserved by the bank, became appurtenant to the dominant estate, and passed to plaintiffs as grantees of the dominant estate. The decree denying plaintiffs the right of way is reversed and a decree may be entered here in consonance with this opinion, with costs to appellants.
Carr, C. J., and Butzel, Btjshnehl, Sharpe, Keid, North, and Dethmers, JJ., concurred. | [
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Reid, J.
This litigation has to do with some of the affairs of. Toynton-Brown Company. Certain other affairs of that company have been before this Court in the case of In re Dissolution of Toynton-Brown Company, 308 Mich. 727, and in the case of Fellinger v. Wayne Circuit Judge, 313 Mich. 289. The bill in this case was filed by Edward S. Piggins, receiver of the Toynton-Brown Company. Plaintiff claims that an assignment by Charles F. Brown, president of Toynton-Brown Company, of the interest of the company to himself (Brown) and defendant Joseph A. Fellinger, is void as being made in breach of fiduciary duties. By the assignment in question, Charles F. Brown undertook to assign the selling agent’s rights of Toynton-Brown Company' as to some real estate owned by Joseph E. McClelland and Elizabeth McClelland, his wife. ‘
Three principal questions are raised by the parties. One has to do with the right of this Court to entertain jurisdiction of an appeal where the record was not settled by the trial judge within 1 year and 6 months after the entry of the decree. The second question involves the right of the president who was also director of the corporation to sell an interest In a selling contract, without the approval of the board of' directors, to himself ,an'd another person who was an employee of the com pany. The third question, has to do with the amount of commission payable to defendant Fellinger if the assignment in question is set aside. The decree of the trial court was favorable to plaintiff on the second and third questions above referred to. Defendant Fellinger appeals.
As to the first question above stated, it is the claim of plaintiff that under the statute, 3 Comp. Laws 1929, § 15510 (Stat. Ann. 1943 Eev. § 27.2610), the Supreme Court has no jurisdiction to extend the time for taking and perfecting of appeals beyond 1 year and 6 months from the date of the entry of the decree sought to be appealed from. Plaintiff further relies upon the last sentence in Court Eule No. 66, §2 (1945), which recites:
“The Supreme Court may, upon proper application and for good cause shown, extend the time for settling the record on appeal beyond 1 year from entry of judgment for an additional period not to exceed 6 months.”
The decree appealed from was filed October 6, 1944. Claim of appeal was filed October 10, 1944. The typewritten transcript of the testimony and proceedings consisted of some 444 pages of typewritten matter. At various times various extensions of time to settle the record were made extending the time to and including May 21, 1945. On May 14, 1945, defendant Fellinger made a motion for 60 days’ further extension, which motion was denied by the circuit judge. Defendant Fellinger sought mandamus to require the circuit judge to extend the time. The writ was denied by us on January 7, 1946, at which time the trial court’s' jurisdictional limit of one year had expired. Defendant Fellinger by motion in the Supreme Court asked further time. On March 5, 1946, we granted defendant 60 days from January 22, 1946. It appears that on March 11, 1946, defendant prepared, noticed and served on plaintiff’s counsel, a proposed record on appeal, and noticed it for settlement before the trial judge on March 15, 1946. Defendant Fellinger made a showing to the effect that plaintiff asked for an adjournment of one week from March 15, 1946, to prepare amendments and exhibits to be incorporated in the record, and that defendant Fellinger’s counsel agreed to the adjournment for one week from March 15, 1946, but that the trial judge adjourned the matter not to March 22, 1946 but to April 19, 1946, which latter date was more than 1 year and 6 months from the date óf the entry of the decree sought to be appealed from, and that no opportunity was given defendant to obtain certification of the record before expiration of 18 months from entry of the decree appealed from. On March 26, 1946, defendant Fellinger filed and served notice of a motion for further extension of time, claiming that the reasons for the noncertification were beyond the control of the defendant. On April 4, 1946, we entered an order based on the showing made by defendant, granting defendant 60 days from and after April 4, 1946, within which to have the case settled on appeal. We did this because of the showing that was made to the satisfaction of this Court that the noncertification of the record on appeal was a matter which had occurred for reasons not within the control of defendant. We have heretofore held that it was not the intention of the legislature “to deprive a party of his right to an appeal because not taken within a time fixed from circumstances beyond his control.” Cameron v. Calkins, 43 Mich. 191. See, also, Perkins v. Perkins, 173 Mich. 690, 694. Plaintiff’s objection to the extension is without merit.
Charles F. Brown and his wife, Gladys F. Brown, were the owners of one half of the capital stock of the Toynton-Brown Company and Ralph E. Toynton was the owner of the other half, and the said three persons, together with Jennie D. Toynton, wife of Ralph E. Toynton, she acting as secretary, were the' directors and officers of the corporation. On July 21, 1939, defendants McClelland entered into an agreement, known as exhibit A. in this record, with the Toynton-Brown Company,, which agreement constituted the Toynton-Brown Company McClellands’ agent to sell lands in Southfield township, Oakland county, for subdivision purposes. The owners, McClelland and wife, were to receive not less than $400 per acre. All above $400 per acre (net to owners) was to be the commission of the company as selling agent. Toynton-Brown Company was obligated at its own expense to grade a road to meet the approval of the Oakland county road commission and as soon as practical, gravel the same in accordance wifh the county’s specifications.
It was the claim of Charles F. Brown in the suit which on appeal was before this Court in Be Dissolution of Toynton-Brown Company, supra, that at the same time that the agreement, exhibit A, was entered into, another document, exhibit B, was executed, assigning the interest of Toynton-Brown Company to Charles F. Brown and Joseph A. Fellinger. In a voluntary proceeding for dissolution of the corporation, a receiver was appointed. During the receivership, in pursuance of the agreement of the parties, a board of arbitrators, consisting of seven members of the Detroit Real Estate Board, was appointed and heard disputes about corporation matters. The decision of the arbitrators required Charles F. Brown to assign to the corpo ration his undivided one-half interest* in the agreement with McClelland and wife above referred to. See In re Dissolution of Toynton-Brown Company, supra, 734. In our decision in that case, the decree which confirmed such decision of the arbitrators was .affirmed by this Court. The bill in the case at bar attacks the right of Fellinger to the other one-half interest in the agreement with' the McClellands.
Charles F. Brown and Joseph A. Fellinger in the case at bar both testified that Mr. Toynton knew about the McClelland matter, that he was unwilling to have the matter stand on the company books as a company matter and seemed to feel that the venture was unwise, and that accordingly, exhibit B, the assignment to Brown and Fellinger, was signed by Brown because Toynton objected to the selling-contract, including some outlay for improvements on the property, being assumed by the company. It seems that exhibit B, the assignment to Brown and FelliNger, was in a file in the safe to which all the officers of the company had access, and references to the-selling contract as payments came in were on the books of the company in a manner which could have attracted the attention of Mr. 'Toynton to the method of keeping account of this subdivision on the books of the company.
As before noted, Mrs. Toynton was the secretary of the company and in actual charge of the office. The assignment to Brown and Fellinger left the company'still entitled to a- “selling commission.” The testimony of Mr. Toynton indicates that 20 percent. was the regular selling commission and that 20 per cent, was the commission set forth in exhibit 6, which will hereafter be referred to and which was an unsigned statement left- in -the company’s file by Brown as to the method of handling the McClelland subdivision. In exhibit 6 appears the item, “Toynton-Brown Co. Comm, ratei 20%,” so apparently the Toynton-Brown Company was authorized'to have 20 per cent, commission notwithstanding the assignment to Brown and Fellinger. Toynton was the only witness who testified to anything that would show an actual intent to defraud the company or that the company to any extent was actually defrauded by exhibit B.
The proposed setup of the company, which seems to have served the purpose of a set of bylaws, provided that the company should not be obligated financially by any of the officers for an amount in excess of $50 without the approval of the board of directors. The assignment of the McClelland selling contract by Brown to himself and Fellinger deprived the company of the sole source of repayment for the improvements required in that selling contract to be made by the company, and the amount of the improvements evidently far exceeded $50. It can be considered that the assignment is void because not approved by the board of directors.
We held in Re Dissolution of Toynton-Brown Company, supra, that the assignment was void as to Brown. The utmost of good faith was required of Brown in making the assignment to himself and Fellinger. See Mayhew v. Edward G. Budd Manufacturing Co., 258 Mich. 381. That utmost of good faith is not shown in the case at bar. Fellinger with full knowledge of the circumstances is not to be treated as having acted in good faith. . We accordingly hold that the assignment to Brown and Fellinger was void as to Fellinger also.
There remains the question of the commission to which.Fellinger is entitled. Fellinger procured ior the Toynton-Brown Company the contract with the McClellands, on which matter he had been working for a very great length of time. He finally, after much persuasion, and after many attempts, succeeded in getting the McClellands to make the sales agreement in question, exhibit A. Fellinger also sold most of the lots that were sold in the subdivision. He was a salesman regularly under general contract with the company to make sales for the company. His contract was in writing but it was not produced upon the hearing. It was agreed, however, that his contract with the company was the same as a blank form which was offered in evidence, being exhibit 20, which contained the following:
“When the salesman shall perform any service hereunder, whereby a commission is earned, said commission shall, when collected, be divided between the broker and salesman, in which division the salesman ■ shall receive 40 per cent., the lister 10 per cent., and the broker shall receive the balance. ’ ’
There is nothing in' exhibit A, the selling agreement with the McClellands, to indicate that the company shall receive only a 20 per cent, sales commission. The company in its agreement with the McClellands was entitled to receive all the profit that was made on the sales of lots in this particular, subdivision over and above $400 an acre and expenses.- Mr. Fellinger, therefore, under his general contract would be entitled to a commission of 10 per cent. as. the lister because he procured the contract with the McClellands. As to all sales made by him, he would also.be entitled to 40 per cent, of the profits of the company over and above $400 an acre and its expenses. That this was the understanding of the parties clearly appears in the record’. Both papers, exhibit A, the McClelland contract authorizing Toynton-Br'own Company to act as the McClellands’ representative, and exhibit B, which we have found void, were drawn by Mr. Byown without the guidance of any attorney and are'very 'poorly drafted documents.
Mr. Brown also drafted and apparently filed in the company’s office an article, exhibit 6, heretofore referred to, which is as follows:
“McClelland’s
' College View Subdivision
Description : Part of the W. % of N. W. % Sec. 27 Southfield Twp.
Location : S. E. corner 10 Mile & Redford Roads.
Present Owner: Date Acquired: Title — How Held: Mtgee or Vendor: Chas. F. Brown and J. A.Fellinger. July 21, 1939. * Contract. Joseph E. McClelland and Elizabeth McClelland.
Release Clause: $400.00 per acre.
Toynton-Brown , Co. Comm. Rate: 20%.
How Payable: of all collections.
Salesmen’s Comm. : C. F. Brown — R. E. Toynton —J. A. Fellinger — 10%. Others — 7.%%—payable out of first commission received.
Cooperating Broker Commission : 7% % ’ ’
It will be seen that exhibit 6 presumes that Toynton-Brown Gofnpany is to have a commission rate of 20 per cent. This, however, can only be understood to be a commission to the company oii the strength of exhibit B being treated and considered as a valid and.controlling document. With exhibit B held void, Toynton-Brown Company’s commission rate is the entire profit that it makes on the deal over and'above its expenses and’ $400 per acre to the owners.
Exhibit 6 further has an item, “Salesmen’s Comm. : C. F. Brown — R. E. Toynton — J. A. Fellinger — 10%. Others — 7Y%—payable out of first commission received.” No showing was made that Fellinger agreed to exhibit 6 as a modification of his general sales agreement, and the construction that Nthe trial court put upon exhibit 6 that Fellinger •shall have only 10 per cent, commission, is a construction based on considering part of the arrangements of the parties under exhibit B, the assignment, as though continuing and valid, whereas we have found the entire assignment invalid. The trial court found that the salesmen, Brown, Toynton or Fellinger, wh5 were designated in exhibit 6 to receive. 10 .per cent., shall receive 10 per cent, of the 20 per cent, designated as the company’s selling commission. "We determine that exhibit 6, which was placed in the file without Mr. Fellinger’s consent or acquiescence, is not a valid modification of his general contract as salesman. The commission in. this case is governed by Fellinger’s general contract. It does not lie with the receiver to say that for certain purposes exhibit B is a valid contract so far as it will aid the purposes of the' receiver and a void contract fovr some other purposes.
In view of our decision, other questions raised do not require further discussion.
Mr. Fellinger is entitled to receive 40 per cent, of the profits of the company on all lots in the McClelland subdivision that were sold by Fellinger, and he is entitled to receive 10 per cent, of the company’s profit as lister on all, lots sold in the subdivision. Apparently a further accounting will be needed.
The decree appealed from is affirmed, except as herein modified as to the rate of commission of' Fellinger. The suit is remanded to the trial court for such proceeding’s as shall he found necessary. Both parties having prevailed in part, no costs are allowed.
Carr, C. J., and Btjtzel, Btjshnell, Sharpe, Boyles, North, and Dethmers, JJ., concurred.. | [
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Reid, J.
Defendant appeals from that portion of a decree of divorce which awarded $3,000 as property settlement to plaintiff. Defendant does not appeal from any other provision of the decree. Plaintiff in her cross-appeal claims that the award to her is insufficient.
The real estate, which was owned by the parties by the entireties, was recently sold. By stipulation of attorneys, the financial status of the parties is as follows:
Cash from sale of farm owned as tenants by the entireties $4,484.75
Joint bank account 2,500.00
Cash representing sale price of some livestock owned by defendant 411.00
Other personal property owned by defendant .. • 1,613.00
The parties were married February 8, 1932. One child, Kathleen, now 7 years of age, was born of the marriage. Each of the. parties had been married previously. Defendant’s former wife had died. Plaintiff was divorced from her former husband; by her former marriage she had three children, who at the time of her marriage to defendant were 12, 7 and 3 years of age.
Defendant claims hé contributed largely to the support of .plaintiff’s three children during the 14 years the, parties lived together, but plaintiff claims the amount of such support was much less than that claimed by defendant.
Defendant in 1937 lost the farm he then owned in Wayne county, together with personal property located thereon worth $5,000. Thereafter defendant bought the farm which was recently sold, and paid $300 down. He claims that the balance was paid as a result of his hard labor. However, plaintiff testified that she kept the household, did the housework, did some work in the fields, and that while defendant was working at Great Lakes that she did all the chores and milked the cows.
After a careful consideration of the entire record, we conclude that the award of $3,000 to plaintiff is fair and should be affirmed. The decree does not expressly recite that defendant is freed from any future payment of alimony for support of plaintiff, yet such freedom' from future alimony is to be inferred. See 83 A. L. R. 1248, which cites at 1250, 1251, in addition to cases from many other jurisdictions, the following Michigan cases: Moross v. Moross, 129 Mich. 27; Harner v. Harner, 255 Mich. 515.
The decree appealed from is affirmed. Costs to plaintiff.
Carr, C. J., and Butzel, Bushnell, Sharpe, Boyles, North, and Dethmers, JJ., concurred. | [
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Carr, C. J.
The parties to this case were married on January 13, 1943. At that time plaintiff was a resident of Blissfield, Lenawee county, Michigan, where he was engaged in business, and he continued to live there following the marriage. Defendant resided in Toledo, Ohio, until January, 1944, at which time the parties established a home together in Blissfield., Two or three months after the marriage defendant -started a divorce suit in .Ohio, the case being discontinued in September, 1943. Following the establishment of a residence in Michigan they continued to live together until June, 1945. No children were born of the'marriage. The parties owned household furniture and were also tenants by the entireties of their home, which the record indicates was worth, approximately, $3,500. Plaintiff also- owned a vacant lot worth approximately $250, and a reasonably profitable ice and coal business.
Plaintiff filed suit for divorce in July, 1945, charging in his bill of complaint that defendant had been guilty of conduct towards him amounting to extreme and repeated cruelty. He alleged specifically that she had called him vile and improper names, had sworn at him on occasions, had wrongfully accused him of improper associations with- other women, had embarrassed and humiliated him by creating scenes in public places and, in general, had made his life unbearable by her nagging, quarrelsome disposition. Defendant filed an' answer denying the charges made against her, and, also, a cross bill in which she alleged, that plaintiff and cross-defendant had been guilty of physical violence toward her on different occasions, had called her vile and profane names, and had made threats against her. She claimed in her pleading that plaintiff and cross-defendant had been guilty, generally, of such a course of conduct as constituted extreme and repeated cruelty towards her. Plaintiff and cross-defendant filed his reply to defendant and cross-plaintiff’s answer and, by his answer to the cross bill, denied the charges made against him.
On the trial of the case plaintiff and cross-defendant testified in support of the allegations of his bill of complaint and in refutation of the charges made against him. His testimony was corroborated in certain respects by witnesses who, so far as the record discloses, had no interest in the outcome of the case. Defendant and cross-plaintiff was a wit ness in her own behalf, testifying in accordance with the allegations contained in her pleadings. Her testimony was not corroborated by other witnesses, except with reference to the' condition of the furnace in the home, which she claimed to have replaced at her own expense.
After listening to the parties and their witnesses the trial court rendered a decree granting a divorce to plaintiff and cross-defendant on the grounds alleged in his bill of complaint. By the terms of said decree the home of the parties was given to plaintiff and cross-defendant and he was required to pay the sum of $750 to defendant and cross-plaintiff in lieu of dower and by way of property settlement, together with the further sum of $295.50 as reimbursement for the cost of the furnace, and an attorney fee in the sum of $50. The household furniture was awarded to defendant and cross-plaintiff. From such decree she has appealed. No complaint is made with reference to the division of the property interests of the parties but it is claimed that under the proofs the trial court was not justified in granting a decree of divorce to appellee.
On behalf of appellant it is insisted that appellee was guilty of conduct-of such character as precluded the granting of relief to him, that the parties were mutually at fault, and that the evidence “required the court to deny a divorce to either party.” The argument rests on the assumption that appellant’s testimony with reference to the marital difficulties of the parties was, in its main details at least, a correct presentation of the actual situation. Such testimony was contradicted, however, not only by appellee*but by disinterested witnesses. Two of the latter testified positively to a scene created by appellant on a public street in Blissfield at which time she assaulted appellee and struck him with her purse. Appellant denied the ocóurrence. She also claimed that on a certain occasion in Toledo, shortly after' the marriage, appellee assaulted her and broke her wrist. Her testimony in this regard was contradicted by appellee, and, also, by a witness in his behalf. These witnesses were apparently disinterested. No reason is apparent why they should have deliberately falsified their testimony.
Appellant’s testimony was further impeached by her admissions on the witness stand with reference to the number of times that she had been previously married and, also, as to her ownership óf real estate during the marriage. After denying such ownership she was confronted with documentary evidence showing a sale by her of certain property, result-' ing in her admission that the denial was untrue. She also testified on cross-examination to the effect that she had been married twice prior to her marriage to appellee. . Evidence was then produced indicating another marriage, which she finally admitted. Appellee’s testimony was not contradicted other than by appellant’s version of the difficulties that had occurred between the parties.
In denying a motion for a new trial the circuit judge expressed himself as satisfied that appellee had testified truthfully on the witness stand and that appellant had not done so. The determination of a controversy of this character rests largely on the credibility of the witnesses, including the parties themselves, The trial court in the instant case had an opportunity to observe the parties, as well as the other witnesses, note their demeanor in testifying, and^draw conclusions as to the weight to be given the testimony of each. On the record before us we do not think that the conclusions reached should be disturbed. In Billingsley v. Billingsley, 315 Mich. 417, it was said:
“In the present case there was testimony, which the trial court apparently believed, which established plaintiff’s right to a divorce. We have carefully reviewed the record and are not convinced that we would have reached a different, conclusion, had we been sitting as a trial court.”
This statement may well be applied to the case at bar. See, also, Brookhouse v. Brookhouse, 286 Mich. 151; Chubb v. Chubb, 297 Mich. 501; Johnson v. Johnson, 313 Mich. 195.
It is also contended by appellant that appellee condoned her acts of extreme and repeated cruelty towards him by continuing to live and cohabit with her. Condonation, implying forgiveness for offensive conduct, is conditional on the nonrepetition of such conduct. In the case at bar, the acts of ex-' treme and repeated cruelty, on the basis of which relief was granted by the trial court to appellee, were continuous during the period of .time that the parties lived and cohabited together. The fact that appellee continued to live with appellant in the marital relation, apparently in the hope that the parties might avoid a final separation, was not a bar to the granting of relief to him. Tackaberry v. Tackaberry, 101 Mich. 102; Austin v. Austin, 172 Mich. 620.
The decree of the trial court is affirmed. In view of the nature of the case, no costs are allowed.
Btjtzel, Btjshnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Sharpe, J.
Plaintiff, George Gombasy, and defendant, Rose Gombasy, were married on April 16, 1941, in Detroit, Michigan. On February 6, 1946, plaintiff filed a bill for divorce. Personal service was made on defendant the following' day. No appearance having been filed by defendant, an order of default was entered on March 5, 1946, and on April 30,1946, a divorce decree was granted to plaintiff.
On October 21, 1946, defendant filed her petition to set aside the default and vacate the decree upon the theory that said decree of divorce was procured by fraud in that defendant was induced by plaintiff to refrain from taking’ action to set aside the default until the time for that purpose had expired:
‘ ‘ (a) By living and cohabiting with defendant as husband and wife during all the time that this suit was pending and up to the time of the granting of such final decree.
“ (b) By previously starting, and then abandoning six suits for divorce against the defendant, thereby inducing the defendant to believe that he did not intend to prosecute the present cause to final decree. ’ ’
Defendant also alleges that plaintiff is the owner of a dwelling house, has $1,000 cash in a bank, owns United States Victory bonds in the amount of $500; and that when the decree of divorce was entered she was awarded only the sum of $1 for her dower rights in plaintiff’s property.
Plaintiff filed an answer to (defendant’s petition to vacate the decree and denies all allegations therein except that he is the owner of a house located at 3429 S. Edsel street in the city of Detroit. Further answering said petition plaintiff alleges that defendant wrote him a letter the day previous to the time of obtaining the decree, a part of which reads as follows:
“Thank you for being strong enough to see the divorce through. I hope you will be very happy tomorrow when you get it. You should also know that if I wanted to stop you you couldn’t get it, but go ahead and good luck. At least your darling is happy. What you can do for me is that when you get the divorce decree. I would like my maiden name back, Rose' Bella. May Grod bless you and keep you.-’ ’
Defendant filed a reply to plaintiff’s answer in which she alleges that she wrote the letter to plaintiff “because she felt that the psychological effect oif this letter on the plaintiff would be to stop him from getting the divorce.”
The cause came on for hearing before the trial court and a demand was made by the defendant to take testimony in support of her motion to set aside the default and vacate the decree. The trial court denied the motion to take.testimony for the following reasons:
“In her reply to the answer to the petition to set aside the decree she admits writing the letter and .says she did that for psychological reasons to change the plaintiff’s mind in reference to divorce. From that it clearly appears that she knew about the divorce ; she knew that he was going to get it, and if she had any knowledge, as she claims, that he was having intercourse with her and living with her, she knew this before the divorce was granted and if it were true she should have taken steps at that time to inform the court of the matter, as she herself would be guilty of fraud by concealing this knowledge from the court. She can not now come in and use the charge that her husband had relations with her up to the time the decree was granted as grounds to set aside the decree. If this were true the court would in practically every divorce case have to have a rehearing upon such a charge, which could be made very easily.”
On January 13, 1947, an order was entered denying the petition to set aside the decree. Defendant appeals and urges that plaintiff perpetrated a fraud upon her in procuring the divorce decree and by inducing her to delay filing her petition to vacate the decree; and that it was an abuse- of discretion for the trial court to refuse to take testimony on defendant’s petition to vacate the decree.
It is conceded that all of the proceedings in taking the default and the decree were regular and that the petition to set aside the default and vacate the decree was filed approximately six months after the decree was taken. In discussing the issues involved in, this case, we shall only consider those acts which may have occurred from the time the divorce was started to a period four months after the decree was granted. For the purpose of passing upon the claims made in the petition filed by defendant and in view of the fact that the trial court declined to take proofs as to the allegations made in said petition, we shall assume that the averments made by the wife are true and shall consider them with other pleadings filed by her in the cause.
Court Eule No. 28, §4 (1945), reads as follows:
“Any order entered under this rule may be set aside on special motion for cause shown, in the discretion of the court, on terms. In actions at law, the party desiring to have a default set aside shall, as soon as practicable after she shall know or have reason to believe that the default has been filed or entered, file and serve an affidavit of merits, and make application to the court to have the default set aside. In suits in equity, to entitle a defendant to an order setting aside his default for want of appearance or answer, he shall proffer a sworn answer showing a defense on the merits as to the whole or a part of the plaintiff’s case. In all cases where personal service shall have been made upon a defendant, and proceedings taken after default on the strength thereof, his default shall not be set aside unless the application shall be made within 4 months after such default is regularly filed or entered. And in any case where personal service shall have been made upon a defendant, an order setting aside his default shall be conditioned upon his payment to the plaintiff of the taxable costs incurred in reliance on said default, and the court may impose such other conditions as shall be deemed proper.”
As a general rule, the provisions of this rule are mandatory. An exception to this rule was expressed in Denby v. Ellis, 245 Mich. 124, where we said:
“Even when fraud is alleged as the ground upon which a rehearing is sought after the expiration of the four-month limitation fixed by the rule, it ought not to be granted without there is reason to believe from the showing made that the charge of fraud can be sustained.”
The fraud relied upon by.defendant is that she was led to believe by plaintiff that the divorce suit would be abandoned and that after a decree was taken she was induced to refrain from taking any action to set aside the decree.
We think it can be accepted as a fact that defendant knew that plaintiff intended to pursue the divorce proceedings to a decree. Her letter can be interpreted in no other way. Her claim that she and plaintiff entered into a common-law marriage after the decree was granted is further recognition on her part that a divorce decree was granted and that she was not misled into thinking that plaintiff had abandoned the divorce.
Defendant relies upon Curtis v. Curtis, 250 Mich. 105, in support of her claim that a hearing should be granted to determine the truth of her allegations as stated in her petition. In that case it was alleged that the parties cohabited together during the pend-ency of the divorce suit and that after filing the bill for divorce the husband assured his*wife that his suit for divorce had been abandoned. We there said:
“If, after filing the bill for divorce, plaintiff resumed marital relations with defendant and assured her that the suit was abandoned when he had no such intention, he perpetrated a fraud upon defendant, and, by proceeding to decree thereafter and concealing from the court the fact,of such resumption of marital rights, such fraud, being extrinsic, will authorize the court to vacate the decree. See McGuinness v. Superior Court of the City and County of San Francisco, 196 Cal. 222 (237 Pac. 42, 40 A. L. R. 1110).”
We remanded the cause to the circuit court to take proof of the allegations of fraud.
In the case at bar, defendant knew or had every reason to believe that plaintiff had secured a divorce. Her claim of fraud is that by living together after the divorce was granted, she was induced to refrain from taking any action to set aside the default until after the time for that purpose had expired. She does not state as in the Curtis Case that plaintiff assured her his suit for divorce had been abandoned. Her claim that she was induced to refrain from taking any action to vacate,the decree is incompatible with her allegation that the parties entered into a common-law marriage subsequent to the filing of the divorce decree. Her belief that a common-law marriage had taken place is fortified by the fact that she now has pending a suit for divorce from such common-law marriage.
In coming to our conclusion in this cause we are not unmindful that if there was cohabitation after the divorce decree was granted, that defendant has an equal share in the fraud; and that the doctrine of coming into court with “clean hands” should be applied to the facts in the case at b^r.
In our Opinion the petition filed by defendant, for the reasons hereinbefore stated did not call for the taking of proofs. The trial court was not in error in refusing to take proofs. The decree is affirmed, without costs except that defendant having filed a petition for attorney fees on appeal and cost of printing record and brief and having presented a meritorious question is allowed the sum of $100 for expenses and attorney fees, the same to be paid within 30 days after filing decree in this cause.
Carr, C. J., and Butzel, Bushnell, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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North, J.
By her bill of complaint plaintiff sought a decree of separate maintenance, alleging defendant was guilty of extreme and repeated cruelty. Issue was formed and testimony taken. Thereupon plaintiff filed an amended bill asking for absolute divorce. By stipulation defendant’s answer to the original bill was allowed to stand as his answer to the amended bill. Plaintiff was granted a decree of divorce on the ground of extreme cruelty consisting of defendant’s excessive use of intoxicants and improper association with other women. The decree contained provisions for a property settlement and payment of alimony. No complaint is made of the decree wherein an absolute divorce was granted, but defendant has appealed solely on the ground that the provisions as to the property settlement and alimony were unjust and inequitable. In this respect only, he asserts that the. decree should be modified.
The parties were married in 1919 and separated in June, 1944. Two sons were born of the marriage, but each is of full age or nearly so and therefore their welfare is not involved. The situation as to property rights, as disclosed by the record, is set forth sufficiently accurately in the opinion of the trial judge as follows:
“The testimony showed that he (defendant) now has in his possession war bonds of the Approximate maturity value of $350, that he has a paid-up life insurance policy with a present cash value of $1,190, and $50 in the bank. It also developed that last fall (after the . separation) he got $3,600 from his mother’s estate, which he claims has been entirely consumed by the payment of debts, purchase- of recreational equipment-, and gambling. His testimony as to the disposition of this money is most unconvincing, and I believe we can find as a fact that he still has a substantial portion of it in his possession. He also has a truck which he testified according to the O. P. A. price its value is $299.50, and he has a 1935 Chevrolet (these two items are stated in defendant’s brief to 'be of the value of $500), machine tools worth $200, and a note of Edna Groves in the amount of $120 for money loaned under suspicious circumstances, He &nd a sister are the sole legatees of his father’s estate, * * * and he testified that he thought that it was inventoried at approximately $8,000. We are definite in that thd estate contained 37 shares of $100 par, Consumers Power stock bearing an annual interest rate of between 5 and 6 per cent., and that he either has or will secure 19 shares thereof. He is employed under civil service in a permanent position, receiving $110.17 bi-monthly [semi-monthly?], from which is deducted $5.54 retirement payment and $11.70 tax withholding, leaving him approximately $45 a week, net. * * * His entire testimony as to his present worth was most unconvincing.
“Plaintiff has government bonds of the present maturity value of approximately $475, has a 1931 Ford, and is in possession of the household furniture.
“The parties jointly own a house in Holt, with a present cash value of approximately $5,500, subject to a mortgage of $2,500 payable to defendant’s father’s estate. Apparently this mortgage is to be. paid out of defendant’s proceéds of the estate.”
The foregoing factual aspect of the ease should be amplified by noting that following a ^course of excessive use of intoxicating liquors defendant left the home of the parties in June, 1944, and has continued ever since to live elsewhere. The bill of complaint was filed November 1, 1945. Since the separation plaintiff has continued in possession of the home and the household furniture. Prior to the order for temporary alimony she received from defendant limited and irregular contributions toward her support. For some years past and at present plaintiff is suffering from a back ailment which impairs her ability to engage in any work which requires lifting. Subsequent to the separation plaintiff took defendant’s father into her home and for a number of months cared for him in illness with but limited and inadequate compensation. The home •was originally purchased on a contract, the down payment of $500 was furnished by defendant’s father. Subsequent contract payments were made from defendant’s earnings. Ultimately the property was deeded to the parties jointly and a mortgage of $2,500 given to defendant’s father. That amount in payment of the mortgage will be taken into consideration in settling the father’s estate, of which defendant and his sister are the only heirs.
Under the above record the decree provided that defendant should pay plaintiff alimony in a lump sum within 30 days from the date of the decree in the amount of $500, and $15 weekly during the life of plaintiff or until the further order of the court. As to property settlement the decree ordered the payment of the mortgage encumbrance on the home property by defendant and vested sole title thereto in plaintiff. It was also decreed that plaintiff should have as her sole property the Ford automobile, title to which was in her name, the furniture located in the home, and the United States war bonds in her-possession. Except as so provided the other items of defendant’s property hereinbefore .enumerated were awarded to him as his sole property.
We have given consideration to appellant’s contention, which in substance is that the provisions in the decree touching alimony and property rights are -not justified by the testimony; and, in short, that the alimony and property provisions in the decree are unjust and inequitable under the circumstances of the case. We are not in accord with this contention. In awarding alimony in a lump sum of $500 the trial court evidently had in mind plaintiff’s indebtedness for a physicianjs service in excess of $100, and in this ✓connection the court said: “It is expected that out of the amount awarded to her she shall pay her attorney a liberal attorney fee. ’ ’ Briefly stated, the decree gave defendant, who has a substantial earning capacity, property of the value of nearly $8,000; and awarded to the wife the Ford automobile to which she already had title, and the household furniture ; also other personal property and real property substantially of the value of $6,500, together with alimony at the rate of $15 per week. Under the circumstances disclosed by the record, we are of the opinion that the alimony and property settlement provisions in the decree are just and equitable. The decree is affirmed, with costs to appellee.
Carr, C. J., and Btttzel, Bushnell, Sharpe, Boyles, Reid, and Dethmers, JJ., concurred. | [
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Reid, J.
Plaintiff filed his bill of complaint to obtain the construction of a written contract relative to the sale of merchantable timber and trees standing on 40 acres of ground owned by the defendant. The litigation has reference to. logs cut by plaintiff and left lying upon the premises of defendant. The bill prays for equitable relief against forfeiture of title to the logs and that defendant be temporarily and permanently restrained from disposing of the logs, and for compensation and damages by reason of the deterioration and loss in value of the logs. The trial judge determined that the title to the timber in controversy is in the defendant, and that plaintiff has no interest therein. From the decree for the defendant, plaintiff appeals. The agreement in iquestion, to which a certificate of acknowledgment is appended, is as follows:
“AGREEMENT
“This agreement made this 29th day of August, 3.942,
‘ ‘ By and between Fred A. Kimmell, a single man, of Newberry, Michigan, hereinafter called the vendor, of the one part and George A.. Feneley, a mar ried man, of Engadine, Michigan, hereinafter called ( the purchaser of the other part.
“Witnesseth as follows:
• “ (1) That the said vendor agrees to sell and the said purchaser agrees to purchase, for the sum of $1,200, on which a deposit of $500 has now been paid, and the balance of $700 which is to be paid on September 1, 1942, all the merchantable timber and trees now standing and growing on a certain parcel of land situated in the township of Columbus, Luce county, in the State of Michigan, and described as follows, to-wit:
“The northeast quarter of the northeast quarter (NE^NE1^ of section twenty-eight (28), township forty-seven (47) north, range twelve west (12W).
“ (2) The said vendor hereby grants unto the said purchaser and his assigns the full and free license and authority to enter into and upon the said land with his servants, agents and workmen, and to cut down said timber and trees, to build roads for the removal of said timber and trees; and to remove the said timber or trees, when and as he, said purchaser,- or his assigns, shall think proper and within the time hereinafter limited;
“And the said purchaser further agrees to cut and remove the said timber or trees on or before the first day of September, 1945.
“(3) It is mutually agreed between the parties hereto that the payment of the taxes are to be paid by the party in possession of the sMid land on the assessment day; to-wit:
“April first of each year during the term of this agreement; if the said purchaser hereby agrees to release any of the timber on the said premises, he is to obtain a release of the taxes for that particular year.
■ “(4) It is hereby expressly understood between the parties hereto that any and all timber remaining upon the said premises after September 1, 1945, is to be forfeited to the vendor, his heirs or assigns and further that this agreement shall end and cease on the aforementioned day. It is also agreed herein that this agreement hereby binds the heirs, representatives, or assigns of the respective parties hereto.
“In witnesseth wherefore, the parties have hereunto set their hands and seals the day and year written above.
VENDOR
“Signed, Sealed and delivered in the presence of: /s/ Fred A. Kimmell Fred A. Kimmell
PURCHASER
“/s/ J. P. Shimmens /s/. George A. Feneley JV P. Shimmens George A. Feneley
“/s/ Nadema Shimmens Nadema Shimmens” ■
The one real question involved in this case is whether after September 1, 1945, defendant was the owner of the logs still remaining upon his 40 acres. Plaintiff cites Kerschensteiner v. Northern Michigan Land Co., 244 Mich. 403. The parts of that lengthy opinion which are of value to us in the case at bar are found on pages 442, 443 and 444 and are as follows, beginning on page 442:
“The habendum clause of the deed provided:
“ ‘ To have and to hold said timber until the said first day of April, 1924, unto said party of the second part an$ its assigns, provided however, that all timber standing on said lands on the first day of April, 1924, shall be and become the property of the first parties as their respective interests may appear”
Further, on page 443:
“Plaintiffs claim the logs and forest products cut from standing timber on the lands conveyed by this deed reverted on April 1, 1924, the logs having been stored on some of the lands described in the deed, although not upon the particular descriptions upon which the timber stood and from which it had been removed. * * * The timber cut from the land before the expiration of the time limited for its being cut and removed was, under the rule of Hodges v. Buell, 134 Mich. 162, personal property.”
Further, on page 444,
“The timber which had been cut from the premises and stored for shipment was cut and removed within the meaning of this deed. Hodges v. Buell, supra; Austin v. Brown, 191 N. C. 624 (132 S. E. 661). * * * We think the timber under this deed was so far cut and removed from the premises upon which it stood as not to be -affected by the doctrine governing estates in reversion, that it was personal property, and, as such, the title thereto was vested in the purchasers thereof. Williams v. Flood, 63 Mich. 487; Macomber v. Railroad Co., 108 Mich. 491 (32 L. R. A. 102, 62 Am. St. Rep. 713) ; Hodges v. Buell, supra; Austin v. Brown, supra.”
The habendum clause in the deed in the Kerschensteiner Case greatly differs from the agreement in the case at bar.
Plaintiff also cites our decision in Hodges v. Buell, 134 Mich. 162, but to construe the word “remove” in this case to mean remove from stump (as indicated in the Hodges Case) will not aid the plaintiff because it is conceded that the timber was not taken away from the premises and the language of the contract in that particular is unequivocal and free from doubt. The timber under the contract in question had to be taken off the premises entirely before September 2, 1945. There is no escape from the force of the words, “All timber remaining upon the. said premises after September 1, 1945, is tó be forfeited to the vendor, his heirs or assigns.” Those words differentiate the case at bar from both the Hodges Case, supra, and the Kerschensteiner Case, supra.
To rale with plaintiff we would be required to strike out the express recitals of paragraph (4) of the agreement and give force only to plaintiff’s inference as to the meaning of paragraph (2).
It was competent for the parties to agree that all the timber remaining upon the premises after September 1, 1945, should be forfeited to the vendor, his heirs and assigns. The contract was not unconscionable. The plaintiff had three years and two days in which to carry out the conditions of his agreement, evidently a sufficient length of time if he had gone about that business seasonably. We have no way of ascertaining what plaintiff’s real motive was in not taking off the timber seasonably while he had an abundance of opportunity so to do. Defendant was under no obligation to extend the time..
When plaintiff felled the trees, the felled timber became the personal property of plaintiff, conditioned, however, upon removal of the timber from the premises in question before September 2, 1945.
In Hodges v. Buell, 134 Mich. 162, we say at page 169,
“Where one acquires title to standing timber, the same to be removed within a time stated, he cannot be devested of his title to such as he severs from the soil during the period, whether he takes it away from the premises within such period or not (except where, as in Gamble v. Gates, 92 Mich. 510, it is expressly provided that such timber should revert).”
Therefore, the case of Hodges v. Buell, cited in the Kerschensteiner Case, plainly contemplates that where it is provided such timber should revert, there is an exception which we recognize. In Gamble v. Gates, 92 Mich. 510, we say at page 514,
‘ ‘ The plain intent of the agreement was that, even if the conditions and agreements had otherwise been performed, all timber remaining upon said lands at the expiration of the time limited, whether cut or uncut, (italics supplied), should revert and become the property of Gamble. The word ‘revert’ has some significance. The use of it clearly shows that, if the title had passed to Gates by the fulfillment of the contract, still all the timber left and remaining upon the lands at the end of five years should revert and pass back to Gamble.”
Plaintiff claims that if the word “timber” is to be construed as referring to logs cut, then the seller is seeking to enforce an inequitable forfeiture within the holding of Hodges v. Buell, supra, but as above noted, in Hodges v. Buell, supra, a chancery case, we still say on page 16,9 that an express provision that the timber should revert is to be excepted out from any statement that the vendee can not be divested of his title. As we have before noted, it was competent for the parties to this case to make the particular agreement that they did make. Equity could refuse to enforce a forfeiture which might arise by a doubtful implication but there is no showing in this case of any reason why plaintiff should be relieved from the direct effects of his own express contract, plainly written in unequivocal language.
The plain meaning of the word “timber” is to include trees, whether felled or standing, that are suitable to be used for building. Ladnier v. Ingram Day Lumber Co., 135 Miss. 632, 640 (100 South. 369, 370); Kaul v. Weed, 203 Pa. 586, 591 (53 Atl. 489, 490); Gulf Yellow Pine Lumber Co. v. Monk, 159 Ala. 318 (49 South. 248); Great Southern Lumber Co. v. Newsom Bros., 129 Miss. 158, 167 (91 South. 864, 865); Nettles v. Lichtman, 228 Ala. 52, 55 (152 South. 450, 453, 91 A. L. R. 1455); Jasper Land Co. v. Manchester Sawmills, 209 Ala. 446, 448 (96 South. 417, 418). See 41 Words and Phrases, 630, 631.
The word “timber” as used in the agreement in this case must be construed to include logs as well as trees.
The decree appealed' from is affirmed. Costs to the defendant. .
Cakr, C. J., and Butzel, Bushnell, Sharpe, Boyles, North, and Dethmers, JJ., concurred. | [
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Sharpe, J.
On June 30, 1944, James A. Mooney suffered an accidental injury which arose out of and in the course of his employment with defendant railroad company. Mr. Mooney had been employed for about 40 years as a locomotive engineer. The injury occurred while he was descending from a locomotive cab to the ground. In the act of descending, he took hold of what is called the “grab iron” and slipped to the ground. After reaching the ground he felt a sharp pain in the region of his right groin. He continued working until July 25, 1944. During this period of time, he had pains in his groin and began to have pains in the middle of his back and to the left side of the spine. Mr. ^Mooney returned to work for a few days in the early part of August, but was obliged to quit work because of his disability. He reported the accident within two or three days after it occurred. He went to' the hospital on October 6th and remained there until October 26th when he returned to his home. He returned to the hospital on December 16th for a few hours where he was examined by two physicians employed by defendant company and two physicians of his own choice. He died on January 19, 1945. An autopsy was performed and disclosed “advanced, poorly differentiated, adenocarcinoma of the prostate with metastases in lungs and skeleton. ’ ’ Mr. Mooney was paid compensation from July 25, 1944, to October 7, 1944.
On or about November 24, 1944, Mr. Mooney filed a petition for further compensation claiming total disability as a result of the accident. On January 2, 1945, an amended petition was filed alleging that the trauma of June 30, 1944, had aggravated and stimulated a chronic osteoarthritis of the spine. A hearing was held before a deputy commissioner on January 5, 1945, and on the same date an award was entered granting compensation for the period from July 25, 1944, to October 10, 1944, but denying compensation from that date forward, finding: “that his disability from and after October 10, 1944 is in no way connected with or caused by his injury of June 30, 1944.” *
On January 16, 1945, an appeal and petition for review and an application to take additional testimony were filed by Mooney. On February 19,1945, notice of death and petition, for substitution of the widow, Mrs. Augustine Mooney, as party plaintiff was filed with the department; and on March 26, 1945, she filed an application for hearing and adjustment of claim. On April 9,1945, the department of labor and industry entered an order substituting the widow as party plaintiff and directed that “the cause be remanded to a deputy commissioner to take testimony pertaining to the death of James A. Mooney and its relationship, if any, to his accident. ’ ’
The cause came on for hearing on August 24,1945, in accordance with the order of the department before a deputy commissioner who made an award on October 4, 1945, granting Mrs. Mooney compensation at the rate of $19 per week from January 19, 1945, until the full amount due under the act is paid. Defendant thereupon appealed to the department and on April 10, 1946, the department entered an order affirming the award.
Leave to appeal having been granted, defendant appeals and urges that it was error on the part of the deputy commissioner to admit in evidence at the second hearing, in which the widow was the plaintiff, a transcript of the testimony which had been taken at the first hearing in which James A. Mooney was the plaintiff; and that there is no competent evidence to support the finding of fact that the accident accelerated the growth of a pre-existing carcinoma, and was, consequently, a factor which contributed to decedent’s death.
Defendant relies upon the case of Stone v. Smith, 275 Mich. 344, and the case of Holtz v. Keith Detroit Corp., 276 Mich. 72, in support of its theory that it was error to admit the transcript of testimony taken at the first hearing as the death of the employee “amounted to an abatement of that proceeding.”
In Stone v. Smith, supra, plaintiff employee had been awarded compensation by a deputy commissioner and an appeal was taken to the department. The injured employee died pending the appeal. His widow gave notice of death and petitioned the department to confirm the award of the deputy. ' Subsequently and on June 26, 1935, the department entered an order which provided “that notice and application for adjustment of claim filed in behalf of the dependents, should be granted, the cause forthwith referred to a deputy commissioner to take testimony pertaining to the death of plaintiff and determining any dependents whom there might be, to take such additional proof as might be submitted by either of the parties and make such necessary amendment of the title of the cause by addition of any dependents whom there might be as parties plaintiff, and make a supplemental award in the cause determining only the question of dependency and the names of any dependents and the amount of compensation they might be entitled to but not reviewing, altering or amending the award heretofore made in this cause in any particular.”
Upon appeal, we said:
“In affirming the department’s order of July 11,( 1935, we are construing that order (as did the de-’ partment) to mean no more than that the death of George E. Stone abated the proceedings as to him. This order merely made the abatement a matter of record. But for the purpose of determining the rights of George E. Stone’s dependents to compensation the proceeding is still pending. It was entirely within the administrative powers of the department to remand the proceedings to a deputy commissioner to take testimony as to the death of George E. Stone and the rights of his dependents, if any. Such was the purpose of the department’s order of June 26, 1935. After the supplemental hearing before the deputy ■ commissioner is concluded either party should have the right of review of any question decided at either hearing before the deputy commissioner.” . ■
In the Holts Case, the injured employee was awarded compensation. An application for review was filed by defendant company and while appeal was pending the employee died. Thereafter, defendant presented a petition to vacate the award because of the death of the employee. The department denied defendant’s petition and ordered the case referred to a deputy commissioner to take testi mony as to whom the dependents were and to take further and additional testimony in addition to that theretofore taken. Upon appeal we said:
“On Holtz’ death prior.to the payment of any compensation, there was an abatement of the entire proceeding and of all liability on the part of defendants to pay compensation inasmuch as an appeal had been taken and no final order made on such appeal. * * * The proceeding is still pending for the purpose of determining the rights of his dependents to compensation. It was proper for the department to remand the proceedings to a deputy commissioner to take testimony as to Holtz’ death and the rights of his dependents, if any; that at the supplemental hearing before the deputy commissioner, additional testimony may be taken by either party, each of whom shall have the right of review of any question decided at either or both hearings before the deputy commissioner.' This is in accordance with our opinion on a very similar state of facts in Stone v. Smith, 275 Mich. 344.. The first order stands as construed in this opinion. The second order is held for naught.”
In the case at bar the claim for compensation was abated only so far as the injured employee was concerned. The proceeding was still pending to determine the rights of the dependent. The purpose in each case was to determine whether the injured employee had suffered a compensable injury and, if so, to grant an award to the injured employee or his dependents. The evidence necessary to establish a compensable injury would of necessity be the same in each case. The term “abatement” as used in the Stone and Holts Gases does not mean that the dependent must begin a new proceeding. Such dependent may continue the original claim for compensation by the substitution of a new party claimant and continue the proceedings for the purpose of determining the rights of such dependent. The ■admission of- the testimony, taken at the first hearing when Mr. Mooney was living, at the hearing upon the claim of the widow at the second hearing was not error.
It is also urged that there was no competent testimony to justify the holding that Mr. Mooney’s death was due to' cancer, the growth of which was accelerated by the injury of June 30, 1944.
In the opinion of the department of labor and industry we find the following:
“Doctors Janis and Sloan, who appeared as witnesses for the plaintiff, were of the opinion that the accident could have aggravated or lighted up a dormant cancerous condition. On the other hand, Dr. Alfred LaBine, defendant’s witness, was of the opinion that the injury could.have no effect whatsoever upon the growth of the cancer. We also have the testimony of two well-qualified pathologists and their views are in direct conflict. Dr. Victor LeVine, pathologist, was of the opinion that the accident could have been a factor in the growth of the carcinoma. Dr. Carl Weller, a professor of pathology at the University of Michigan Hospital, whose testimony was taken by deposition, was of the opinion that the accident had no connection whatsoever with the growth of the cancer. Dr. Weller stated that the muscle pain, frequently referred to as a ‘Charley horse,’ is a symptom almost always experienced by one who has carcinoma. of the prostate. It seems that Dr. Weller adheres to a rather strong belief that trauma is not a factor in the development of cancer.
“Here we have a man who, except fpr a hernia repair in 1934 and some slight ulcer difficulty in 1937 and again in 1943, worked steadily for many years and was in apparent good health. He had no symptoms indicating he had any disease. He had never complained of pain in his right leg or in his back. Then, on a particular day this man 64 years of age was involved in an accident. It was not such a minor accident as defendant would have us believe. It is quite obvious that he did injure himself when he had the accident. We can not overlook the fact that almost immediately after the accident a pain developed in his right thigh. That was the ‘ Charley-horse’ type of pain which is a characteristic symptom of carcinoma of the prostate. Undoubtedly the carcinoma was; present in the prostate and in all probability had metastasized to the skeleton before-the accident. It is very likely that it was dormant because he had no symptoms. The symptoms commenced shortly after the accident and became worse and at no time was he symptom-free following the accident. To exclude the accident as a causative factor we must disregard those undisputed facts and in effect conclude that the accident and the activity of the disease are merely coincidental. We think it is very significant that the thigh pain, similar to that caused by a sprained muscle and referred to as a ‘Charley horse’ developed shortly after the accident. He had no such pain before. It seems reasonable to conclude that there is a cause and effect relationship under such circumstances. When there is such a divergence of competent medical opinion, we, as laymen, must necessarily look to the facts for a way out of a seeming dilemma. In our opinion, the chain of circumstances, including' apparent good health of the deceased, the accident, the onset of the symptoms and the progressive nature of the symptoms, the disability and ultimate death, are so closely connected and follow in such a definite pattern that we must conclude the accident did accelerate the growth of the pre-existing carcinoma and was therefore a factor which contributed to deceased’s death.”
We have affirmed awards of compensation when the department found as a fact that trauma did accelerate a pre-existing cancerous condition. See King v. Munising Paper Co., 224 Mich. 691; Melancon v. Chrysler Corp., 284 Mich. 360.
Dr. Paul Sloan, a witness produced by plaintiff, testified, in part, as follows:
“Q. At that time did he tell you about his injury?
“A. He gave me a history of its occurrence.
“Q. What was that?
“A. That he had hold of the grab iron, I think it is called, with his right hand and his foot slipped and he swung around and grabbed the rail with .his left hand and twisted himself. Twisted his arm and back.
UQ. Would the incident described constitute a strain severe enough to aggravate a latent, dormánt inactive metastasis of the spine?
“A. That is my opinion, yes. * * *
“Q. In your opinion what would be the cause of death?
“A. Metastatic adenocarcinoma.
“Q. State whether or not that could have re- ■ suited from the aggravation of a latent metastasis that existed prior to and at the time of the injury?
“A. Could have been, yes.
“Q. Do you know any other types of cases of cancer that are affected by trauma?
“A. Yes, in reference to your question a few mimltes ago you asked one of the other doctors the reason for the doctór’s stand, since there are two antagonistic stands, and my reason for feeling that there is definitely a causal relationship between trauma and the _ flaring up of the carcinoma, I frankly don’t believe that an actual,trauma' causes it primarily, but the flaring up of the metastasis is borne out with and is emphasized to me by carcinoma of the breast and other areas of the body. When a specimen is taken from the breast and sent in for pathological diagnosis, if the report comes back cancer we know that the entire breast has to be re moved immediately due to thé process of flaring up because of having-cut into it merely for the purpose of biopsy. All of the doctors agree'on that. The same is true of carcinoma of the prostate. The symptoms of the metastasis are flared up after surgery is done.”
"We recognize that medical authorities are not in agreement upon the question as to whether trauma can aggravate or accelerate a cancer. The department holds to the view that trauma may aggravate or accelerate a cancer. There is competent evidence to support the view and finding of fact by the department on this question.
The award of the department is affirmed, with costs to plaintiff.
Carr, C. J., and'BuTZEL, Bushnell, Boyles, Beid, North, and Dethmers, JJ., concurred. | [
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Bushnell, C. J.
R. M. Reed, doing business as Athens Box & Basket Company, has appealed from an order granting plaintiff W. C. Ladd’s motion to strike defendant Reed’s- “amended notice of plea of recoupment.”
Ladd, a combustion engineer, doing business as W. C. Ladd Company at Grand Rapids, Michigan, sought recovery of a balance of $400 due him for work, labor, and materials furnished to defendant. On January 22, 1945, Reed addressed three letters to Ladd. In the first, plaintiff was authorized to furnish “all necessary labor for the completion and erection of stack and installing grates and other necessary equipment for the boiler” at defendant’s plant at Athens, Michigan, for the sum of $625. Overtime work was to be paid for not to exceed $150, and the work was to be completed within 30 days. In the- second letter, plaintiff was authorized “to install a new stack to be 60' by 26" in diameter to replace the present stack” for the sum of $500. In the third letter he was authorized “to furnish and install the necessary brick work and chute and grates to replace the Dutch oven for the sum of $500.”
Defendant admitted in his answer to plaintiff’s declaration that the work had been completed and that $1,375 had been paid Ladd, a large portion of it prior to the time that any of the work was commenced. This advance was to enable Ladd to purchase the necessary equipment, materials and supplies.
It is admitted that the stack was satisfactorily installed. Defendant, however, in his answer denied there was any balance due plaintiff and claimed that Ladd was indebted to him because of plaintiff’s “failure to satisfactorily complete said installations.” Attached to Reed’s answer is a “declaration in recoupment, ’ ’ in which he claims:
“That the said plaintiff did thereupon represent to the said defendant that he. could install new grates, blower and other necessary equipment for the boiler, replacing the drying arrangement' that was then in the plant and feed the refuse from the plant into the said boiler room under pressure, properly dried so that he could produce 150 h.p. from the said boiler; that to do this it would be necessary to install certain brick work and grates to replace the Dutch oven for the purpose of drying the refuse material for fuel.”.
It is further claimed that Ladd’s delays resulted in damage to Reed because of loss of operating time, et cetera, amounting to more than $3,000, and that an expenditure of more than $1,000 was required in order to replace the unsatisfactory installations. To this Ladd filed an answer denying the averments of the plea of recoupment together with a notice of a motion to dismiss the same.
At the opening of the trial of the cause on May 3, 1946, plaintiff moved to dismiss defendant’s plea of recoupment on the ground “that it was based on an alleged contract which was separate and distinct from the contract set up in plaintiff’s pleadings.”
After arguments on this motion plaintiff agreed' to waive the common counts set up in his declaration and an order was entered in open court dismissing the plea of recoupment with leave to the defendant to file an amended plea “based on the contract set np in plaintiff’s pleadings.”
An amended “notice of recoupment” was filed on June 19, 1946, practically identical in language to the former plea but with an added count 2, in which defendant stated an express warranty similar to that described jn his original plea, but which was therein stated as a representation. Plaintiff moved to dismiss the amended “notice of recoupment” for the reason that it did not “contain any new or different matter than that contained in the previous notice,” the propriety of which had already been adjudicated.
At the hearing on this motion, on June 29th, plaintiff again agreed to waive the common counts in his. declaration, and on July 9th, the court entered an order striking the amended “notice of recoupment. ’ ’ In this order the trial judge said:
“The rule is well settled in this State, that a notice or plea of recoupment must be based upon the same contract or transaction upon which the suit is brought. The plaintiff, in the present case, declares upon a construction contract, based upon certain written orders signed by defendant. Defendant in his answer does not claim that the work was not performed according to the written orders or contract, but sets up a notice or plea of recoupment in which he claims that plaintiff represented or warranted that the finished job would produce certain results, which he contends that it does not do, and that there is a breach of warranty. However, there is no such warranty included in the written orders for said construction work, sued upon; and no warranty is implied as in the case of sales of merchandise under the uniform sales act.”
The trial judge added:
‘ ‘ To allow defendant to set up a notice or plea of recoupment, based on said alleged warranty, is to allow him to set up a separate and distinct contract from the one sued upon. There being no such warranty in the written orders, it will become necessary at the trial for defendant to present oral testimony to vary the terms of the original orders, to establish a separate and distinct contract from the one sued upon. ’ ’
The contracts were not for the sale of combustion equipment as argued by Reed, but were for services and material to be provided by Ladd in his capacity as a combustion engineer. Such contracts do not fall within the provisions of the uniform sales act (2 Comp. Laws 1929, § 9440 et seq. [Stat. Ann. § 19.-241 et seq.]), and therefore there was no implied warranty of quality or fitness for a particular purpose as provided in section 15 thereof. (2 Comp. Laws 1929, § 9454 [Stat. Ann. §19.255]). See 111 A. L. R. 341 et seq.
Recoupment is a statutory right, in derogation of the common law, and must be strictly construed. Bradley v. Thompson Smith’s Sons, 98 Mich. 449, 454 (23 L. R. A. 305, 39 Am. St. Rep. 565). See 3 Comp. Laws 1929, § 14132 et seq. (Stat. Ann. § 27.-826 et seq.). It is also an affirmative defense, which must be properly pleaded (Lyons v. City of Grand Rapids, 305 Mich. 309), and is applicable to claims arising out of the same contract or transaction (Morehouse v. Baker, 48 Mich. 335; Meyers v. Jay-Bee Realty Corp., 300 Mich. 522). See, also, Platt v. Brand, 26 Mich. 173; Mimnaugh v. Partlin, 67 Mich. 391; and Leslie v. Mollica, 236 Mich. 610, 616 (49 A. L. R. 546).
As pointed out by the trial judge, in order to support Reed’s plea of recoupment, it would be necessary for him to present oral testimony at the trial to vary the terms of the original written orders, or to establish a separate and distinct oral contract from the written ones upon which plaintiff brought his action.
The second “notice of recoupment” presents a theory as to the contract relations between the parties which cannot be reconciled with the theory on which plaintiff’s declaration is based and from which the common counts have been stricken. To permit recoupment under the circumstances of the instant case would do violence to the well-established rule stated in Morehouse v. Baker, and Meyers v. Jay-Bee Realty Corp., supra.
The order dismissing defendant’s “amended notice or plea of recoupment” is affirmed, with costs to appellee.
Sharpe, Boyles, Reid, North, Dethmers, Butzel', and Carr, JJ., concurred. | [
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Dethmers, J.
The cities of Berkley and Huntington Woods, hereinafter called plaintiffs, were incorporated on April 18, 1932, and June 22, 1932, respectively, out of territory located in Royal Oak township, Oakland county, Michigan. Prior thereto the township had been divided into four road districts and, also, into a special assessment fire-protection district. These districts did not include any territory within the plaintiff cities, which then were villages. Taxes were levied in the road districts for road repairs and a special assessment was levied in the fire-protection district for fire protection. While the assessments were adequate, nevertheless, because of delinquencies and defaults, collections were not, with the result that at the time of incorporation of plaintiff cities there had been advanced from the township general fund the sum of $88,132.41 for road repairs in the road districts and $8,387.57 for fire protection in the firo-protection district. For none of this was the township general fund ever reimbursed by said districts, the said assessments in that amount continuing uncollected. Were the general fund to be reimbursed from collection thereof in the districts, the plaintiff cities would be entitled to their proportionate share therein because of their incorporation out of the township. 1 Comp. Laws 1929, § 2250, as amended by Act No. 233, Pub. Acts 1931 (Comp. Laws Supp. 1940, § 2250, Stat. Ann. § 5.2093). Township of Royal Oak v. City of Berkley, 309 Mich. 572; Township of Royal Oak v. City of Huntington Woods, 313 Mich. 137.
In 1941 the city of Hazel Park was incorporated out of territory in Boyal Oak township included in said fire-protection district and in one of said road districts. The cities of Perndale and Boyal Oak in 1940 and 1942, respectively, annexed portions of the township territory included in said road and fire-protection districts.
Plaintiff city of Berkley, and the city of Huntington Woods as cross-plaintiff, petitioned the circuit court of Oakland county for a writ of mandamus to compel the defendants, township of Royal Oak and cities of Royal Oak, Ferndale and Hazel Park, to reassess the said districts for the amounts due from them to the township general fund and to pay over to plaintiff cities their proportionate share thereof when collected. Prom an order dismissing the petitions, plaintiff city of Huntington Woods appeals.
The question raised on appeal is whether reassessments may be made in the road districts and-in the fire-protection district to repay the overdrafts to the township general fund. Plaintiff states that this action is brought in view of statements pertaining to these overdrafts appearing in our opinion in Township of Royal Oak v. City of Berkley, supra, including the following:
“It is conceded that the city is entitled to insist on such reassessment, and we concur with the holding of the lower court that the city is entitled to its pro rata share of the money when and as collected. ’ ’
However, in that case we also said:
“The question of the duty to reassess is not an issue in this case.”
Plaintiff refers to and quotes in part from the following contained in McFarlan v. Township of Cedar Creek, 93 Mich. 558:
‘ ‘ The statute evidently contemplates that each district shall bear its own burdens. It points out distinctly in what manner moneys shall be raised to pay outstanding orders, whether chargeable to the township generally, or to particular portions of the township, or to road districts. Its design is that these orders, if chargeable to certain road districts, shall be paid out of moneys collected from such districts. It would seem here that moneys collected from certain road districts had been expended in others. The proper course would seem to be an adjustment of those matters, not by a general tax upon the township, but by an assessment upon those districts from which balances are due. Nor is it within the power of the township hoard' to make that a township charge, which the statute designs should be a district charge, by the retirement of orders drawn upon district funds, and the issue in their stead of township orders.”
The McFarlan Case holds that a special highway tax may not be levied on the property in the entire township to pay highway orders drawn on a highway fund of a particular road district within the township, but such assessment should be levied on the property in the road district. The case is not authority for the proposition that once the assessment is so made in the district a reassessment thereof may be made to the extent of the uncollected portion of the original assessment. The holding that road district debts are to be paid by the district and not by the township is expressly predicated on provisions of the statute then in effect, Act No. 71, Pub. Acts 1881 (2 Comp. Laws 1897, §§ 4210, 4211, How. §§ 1448, 1449), which provided in part that the amount of unpaid highway orders drawn against a road district should he assessed against such district. That statute was repealed by Act No. 240, Pub. Acts 1915 (1 Comp. Laws 1929, §.120 [Stat. Ann. § 2.321]) and the sections as re-enacted in 1 Comp. Laws 1929, §§ 4184, 4185 (Stat. Ann. §§ 9.488, 9.489) no longer contain the provision for assessment against the individual road district.
Local units of government derive their powers of taxation from the legislature. Their power to impose taxes cannot be exercised except in pursuance of express statutory authority. Unless authority for the defendant township and cities to make the reassessments demanded by plaintiffs can be found in the statutes, it does not exist. People, ex rel. Detroit & H. Railroad Co., v. Township Board of Salem, 20 Mich. 452 (4 Am. Rep. 400); Harsha v. City of Detroit, 261 Mich. 586 (90 A. L. R. 853). What statutory authority is there for such reassessments ?
Plaintiff cites Act No. 283, chap. 25, Pub. Acts 1909, as added by Act No. 266, Pub. Acts 1913 (1 Comp. Laws. 1929, § 4255 et seq. [Stat. Ann. § 9.641 et seq.]) pointing out that under the provisions thereof taxes are authorized to be voted, levied and collected for road repair purposes, but that repairs are to be made before collection of such taxes. Plaintiff then cites 1 Comp. Laws 1929, §§ 4225, 4228 (Stat. Ann. §§ 9.593, 9.596) to the effect that repairs are required to be made when necessary, even though there be no moneys in the road repair fund, and 1 Comp. Laws 1929, §§ 4184-4186 (Stat. Ann. §§ 9.488-9.490) to the effect that highway orders issued in payment thereof are thereafter to be paid by the assessment, levying and collection of taxes. Prom this, plaintiff reasons that it is contemplated that advances for road repairs are to be made from the township general fund, which is to be reimbursed by subsequent levying and collection of taxes therefor in the road districts. In the instant case, however, the road-repair taxes were levied in sufficient amount in the districts, but, due to default of property owners, collections were inadequate to reimburse the general. fund in the amount for which plaintiff now demands a reassessment in the districts. No statutory authority for such reassessment is shown.
Act No. 28, Pub. Acts 1923, as amended by Act No. 150, Puli. Acts 1931, under which the fire-protection district was created, provides for no reassessment. Plaintiff relies, however, upon the amendment contained in Act No. 52, Pub. Acts 1933, which provides:
“Provided, however, That in the event that the' collections received from- such special assessment so levied to defray the cost of said fire protection shall be at >any time insufficient to meet the obligations, or expenses incurred for the maintenance and operation of said fire department, that the township board of said township may by resolution authorize the 'transfer or loan of sufficient money therefor from the general fund of said township to said special assessment fire department fund, the same to be repaid to the general fund of the township out of special assessment funds when collected.”
This amendment authorizes use of general fund moneys for fire protection when the amounts collected on special assessments for that purpose are insufficient and provides that the general fund shall be reimbursed from collections thereafter made on such special assessments.. It does not provide for réassessment of the amounts uncollected on the original assessment for the purpose of .reimbursing the general fund.
Much of the property contained in the fire-protection district and the road districts in 1932 is now within the corporate limits of the three defendant cities. No provision is to be found in the stat-. ntes authorizing either the township or the cities to reconstitute the property now contained in these cities into the old township road districts and fire-protection district and to make the reassessment thereon as such.
Under Act No. 130, Pub. Acts 1931 (as amended, see Comp. Laws Supp. 1940, § 4018-1 et seq., Stat. Ann. § 9.141 et seq.), all the township streets and highways were incorporated into the county road system by 1938. Section 10 of the act provides:
“When the total mileage of the various townships has been incorporated into the county system the townships shall not thereafter levy any highway taxes for any purpose except that set forth in sections eight and eleven of this act. ’ ’
Section 8 is inapplicable to the situation at bar. Section 11 permits levying of township highway taxes “when necessary to take care of obligations outstanding at the time this act takes effect. ’ ’ This exception clearly did not contemplate a reassessment to reimburse the general fund for township moneys theretofore advanced against assessments in the districts and expended to repair township roads.
Mandamus is a discretionary remedy and the writ is one of grace and not of right, to be issued only in case of a clear legal right on the part of plaintiff and a clear legal duty to be performed by defendant. See McLeod v. State Board of Canvassers, 304 Mich. 120; Kosiba v. Wayne County Board of Auditors, 320 Mich. 322, and eases therein cited. Such is not the situation before us.
The order dismissing plaintiff’s petition and cross-plaintiff’s cross petition for a writ of mandamus is affirmed, without costs, a public question being involved.
Bushnell, C. J., and Sharpe, • Boyles, Reid, North, Butzel, and Carr, JJ., concurred.
See, as last amended in 1929, 1 Comp. Laws 1929, § 2460 et seq. —Reporter. | [
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Dethmers, J.
While working at his job in the employ of defendant, plaintiff noticed a bloating and sour condition of his stomach and went to defendant’s first-aid department where he received some soda and Epsom salts. Shortly thereafter he began to suffer cramps, left his work and went home. Later he underwent an operation, which disclosed a ruptured appendix. He filed a claim for workmen’s compensation, alleging that he suffered an injury arising out of and in the course of his employment because of the wrongful administration of salts. The compensation commission of the department of labor and industry, relying on Stables v. General Motors Corporation, 315 Mich. 654, found that he had not sustained a personal injury arising out of and in the course of his employment and entered an order denying compensation, from which no appeal was taken.
Thereafter plaintiff filed suit in the Wayne county circuit court, alleging in his declaration that, under the circumstances, the administration of salts was dangerous, not' in accord with sound or common medical practice and a breach of defendant’s duty to plaintiff, with resultant injury and damage. Defendant moved to dismiss on the grounds that (1) plaintiff’s remedy is exclusively under the Work men’s compensation act (see 2 Comp. Laws 1929, § 8410, as amended by Act No. 245, Pub. Acts 1943 [Comp. Laws Snpp. 1945, § 8410, Stat. Ann. 1947 Cum. Snpp. § 17.144]); (2) plaintiff had elected his forum, thus barring later recourse to courts of law (see 2 Comp. Laws 1929, § 8478 [Stat. Ann. § 17.212]); (3) plaintiff pursued Ms remedy under the workmen’s compensation act to decision by the compensation commission which is res judicata of defendant’s .liability to plaintiff. The court dismissed the case on the ground that “if there is any liability, it must be under compensation.”
Plaintiff appeals, claiming that the case is not one covered by the workmen’s compensation act and that the compensation commission has no jurisdiction over it.
The “ employer-employee relationship existed between plaintiff and defendant and both were subject to the workmen’s compensation act. Plaintiff’s claim for compensation alleged an injury arising out of and in the course of Ms employment. Under the statutes above noted exclusive jurisdiction over the issue thus presented is conferred upon the compensation commission and plaintiff’s filing of such claim constituted a release of all claims at law arising from the injury. Whether plaintiff’s injury and resultant disability were compensable under the act or not, his claim therefor was within the jurisdiction of the compensation commission, and, having proceeded before it under the act, he may not thereafter maintain an action at law. Sotonyi v. Detroit City Gas Co., 251 Mich. 393; Dailey v. River Raisin Paper Co., 269 Mich. 443; Twork v. Munising Paper Co., 275 Mich. 174; Curley v. Beryllium Corp., 278 Mich. 23; Cell v. Yale & Towne Manfg. Co., 281 Mich. 564.
Plaintiff relies on Grand Rapids Trust Co. v. Petersen Beverage Co., 219 Mich. 208, and Hansen v. Pere Marquette R. Co., 267 Mich. 224. The Peter sen Case is distinguishable in that there the plaintiff was a minor, unlawfully employed, this Court holding that, for that reason, he did not come within the workmen’s compensation act, as then in effect, and any proceeding taken thereunder was a nullity and no defense to a subsequent action at law. In the Hansen Case plaintiff had instituted suit in the Federal court and that court held he could not recover under the Federal employers’ liability act because his employer was not engaged in interstate commerce. The subject matter having been one, as it developed, over which the Federal courts had no jurisdiction, we held that the proceedings there constituted no bar to prosecution of a claim before the department of labor and industry. Such is not the situation in the instant case.
Plaintiff proceeded before the compensation commission on the theory that his injury arose out of and in the course of his employment, but, now, in an action at law, proceeds on the theory that it did not so arise. Having adopted one theory before the compensation commission, he may not thereafter bring other proceedings based upon an inconsistent, opposite theory or claim. Mintz v. Jacob, 163 Mich. 280; Donovan v. Curts, 245 Mich. 348; Mertz v. Mertz, 311 Mich. 46.
Plaintiff contends that because defendant took no cross appeal he may urge and this Court may consider no reasons or grounds in support of the order of the trial court rejected or not adopted by it. In this plaintiff is in error. See Township of Pontiac v. Featherstone, 319 Mich. 382, and cases cited therein.
The order dismissing the case is affirmed, with costs to defendant.
Bushnell, C. J., and Sharpe, Boyles, Reid, North, Butzel, and Carr, JJ., concurred. | [
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Buteel, J.
Elsie Rose Miller, plaintiff and appellee, seeks separate maintenance fi;om her husband, Joseph Paul Miller, under the statute (3 Comp. Laws 1929, § 12794 [Stat. Ann. § 25.211]). The court below found that the material facts charged in the plaintiff’s bill of complaint were true, and that the defendant had been guilty of extreme and repeated cruelty to plaintiff as therein charged. The court-decreed a legal separation of the parties which decree requires the defendant to pay the plaintiff $300 a month for her support and maintenance, she to pay all of the expenses of maintaining the family home, except taxes, heating and lawn maintenance.
The defendant’s principal contention on this appeal is that the plaintiff’s bill of complaint should have been dismissed on the ground that her proofs, were insufficient to prove defendant guilty of extreme cruelty.
The parties were married 30 years ago on June 27, 1917. At the time of the hearing, plaintiff was 52 years old and defendant 54 years old. They have three adult children, one son and two daughters, all of whom, éxcept the youngest daughter, are married and live away from the parental home.
At the time of the marriage, defendant was employed as a laborer for $22.50 per week. Through his industry and ability he ha,s risen to the point where today he is the president and owner of 40 per cent, of the stock of the same company by which he was employed when he was married. During the first 20 years of their married life, the parties lived in modest homes commensurate with their circumstances, and in 1937 they purchased a fine home in Grosse Pointer Michigan. In 1945 defendant’s net income after taxes was $21,730.61 and in 1946 it was $21,808.83. Prosperity, which should have brought material comforts and accompanying happiness into the home,'brought frequent domestic quarrels. Defendant became an unreasonable and captious auto-, crat in his home. He established rules of conduct in the home which are possibly justifiable where precision and absolute neatness are required but wholly unwarranted and unnecessary in a home where some degree of comfort should prevail. The family could only enter the house through the rear door, except when company was present. Defendant alone could smoke in the house. Plaintiff was ordered to be at the rear door in the evening so as to open it immediately for defendant when he came home. He arrived at irregular hours, and if she perchance failed to be at the door, she was most severely upbraided. She was in constant dread of incurring his displeasure and the resulting abuse.
Possibly the main difficulty arose from defend-, ant’s excessive drinking. The testimony of plaintiff, corroborated as to one occasion by'that of one of the daughters, who, unfortunately, was called upon to testify, showed that defendant very frequently came home intoxicated. Defendant did not specifically deny that he used liquor to excess. He denied that in 1942 he was almost constantly intoxicated when he arrived home, and when asked whether or not he became drnnk two, three or four times a week, he evaded the question by replying that he never drank heartily in his home where liquor was used to a very limited extent.
In April of 1945 a serious quarrel occurred. Arrangements had been made for the plaintiff and one* of her daughters to visit California in order to attend the expected confinement of the daughter-in-law. Just before plaintiff’s departure, in the course of a quarrel,_ defendant forbade plaintiff from ever speaking to him again. When plaintiff returned home in July, 1945, the injunction was observed. Conditions in the home became impossible. The parties did not speak to one another, defendant ceased to take meals in the home, and moved to another bedroom. Defendant reduced plaintiff’s allowance for the maintenance of the home and herself from $55 a week to $45 a week, and later to $30 a week. From this she was expected to pay for food, clothing, utility bills, et cetera. This sum was totally inadequate when one considers the scale of living the parties had become accustomed to and defendant’s wealth and very large income. We take judicial notice of the rise in the cost of living.
Defendant charges plaintiff with having been unwilling to cohabit with him on one particular occasion and with having avoided him on Sunday nights on the pretext that she had to prepare the washing for the laundry work on Monday. It appears from the record that defendant had not spoken to plaintiff for two weeks prior to the time of the alleged refusal and that their relations with each other were strained almost to the breaking point. Under such circumstances, the refusal was justifiable.
Defendant also claims that plaintiff charged him with immoral’ relations with other women, bnt it appears that this charge of infidelity was not made outside the home and was in no way pressed, being only the result of their mutual wrangling.
There is no statutory definition of cruelty. Each case must be decided on its own merits:. It is true that plaintiff must come into court with clean hands. We believe she has done this and that she has used much forbearance in standing for the tyrannical and cruel treatment of defendant. Defendant ad-. mits that plaintiff is a good housekeeper and conservative in her habits. The evidence showed that plaintiff worked hard, did the cooking, cleaning, sewing, laundry, et cetera, and even on occasion shined defendant’s shoe$. The record does not show that over the period of years plaintiff’s conduct has been such as to in any way justify defendant’s treatment of her, nor to deprive her of the equitable relief she seeks.
The unpleasantness did not arise because of mutual wrangling over money matters as in Beller v. Beller, 50 Mich. 49, on which defendant relies. We have repeatedly held that incompatibility of temper is an insufficient cause of divorce. Morrison v. Morrison, 64 Mich. 53. There was more than that in the instant case.
The misconduct which will form a good ground for a legal separation must be very serious, and such as amounts to extreme cruelty, entirely subverting the family relations by rendering the association intolerable. Kolberg v. Kolberg, 312 Mich. 42. Mere unpleasantness in the home life does not establish a ease of extreme cruelty. Gindorff v. Gindorff, 295 Mich. 469. However, in the instant case conditions in the home life had become intolerable. Defendant at times regarded plaintiff as a. menial in the home and she was in fear of his rage, which was immedi ately aroused if she did not submit to his arbitrary •and unreasonable orders.
Defendant relies on Brookhouse v. Brookhouse, 286 Mich. 151, but in that case we held (quoting from the syllabus):
"While incompatibility, quarrels and display of temper are not grounds for divorce, nevertheless a course of abusive and humiliating treatment of one spouse by another, repeatedly persisted in, * . * * justifies a divorce on the ground of extreme and repeated cruelty.”
In Trombley v. Trombley, 313 Mich. 80, we held that where the wife was not without fault, but the evidence showed the husband was by far the greater offender, that his conduct caused most of the mental discord and provoked the wife’s alleged misconduct, and she herself was not guilty of the more serious charges of misconduct made against him, she was entitled to a decree on her cross bill.
The relief asked for and awarded by the court in the instant suit was separate maintenance and support. Defendant has an income of over $21,000 a year. Latterly he had been giving his wife, $2,860 peb year. When he reduced this amount to $1,650 per year, he left her but little recourse except to apply for separate maintenance and a divorce from bed and board. The statute (3 Comp. Laws 1929, § 12729 [Stat. Ann. § 25.87]) provides that a divorce from bed and board may be decreed "for the cause of extreme cruelty * * * and * * * on the complaint of the wife, when the husband, being of sufficient ability to provide a suitable maintenance for her, shall grossly or wantonly and cruelly refuse or neglect to do so.”
A court of equity as a rule will not undertake to settle disputes as to the exact amount a husband should pay his wife for the support of herself and the maintenance of the home, hut when, as In this case, there is a great discrepancy between the husband’s very large income and the very small and insufficient amount he is'willing to pay'her for her maintenance and support, the court is justified in finding that the acts of the husband constitute nonsupport and extreme, cruelty: The court reserved the determination of permanent alimony until the outcome of this appeal which defendant stated he would take. The court also stated that he would reduce the amount of the alimony if defendant moved out of the home.
The decree is affirmed, with costs to plaintiff.
Bttshnell, C. J., and Sharpe, Beid, North, Dethmers, and Carr, JJ., concurred with Butzel, J., Boyles, J., concurred in the result. | [
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Butzel, J.
Plaintiffs William C. Brown and Esther Brown, husband and wife, filed a petition in a habeas corpus proceeding to obtain the custody of a child born to Esther Brown at a hospital in San Francisco on November 28, 1944. It appears that plaintiff William C. Brown is not the father of the child, it having’ been conceived while he was overseas with the armed forces. The child is in the custody of defendants Richard C. DeWitt and Julia Ann DeWitt, and is being brought up and cared for by them in their home in Zeeland, Michigan.
Five days after the birth of the child, Mrs. Brown, while still in the hospital, signed a written statement, witnessed by two hospital nurses, in which she waived all claims and rights to the baby and gave permission for its adoption. Two days later, after Mrs. Brown had left the hospital, both plaintiffs executed a more formal document in which they consented to the adoption of the child and also agreed:
“It is fully understood by us and each of us that we are giving, up all our rights of custody, services and earnings of said child and that said child cannot be reclaimed by us or either of us. Our consent and the consent of each of us is given with the full knowledge that we and each of us is surrendering the care and custody of said child to said Richard DeWitt, also known as Dick DeWitt, and his wife Julia Ann Skipper DeWitt, also known as Judy DeWitt, husband and wife, and with the full knowledge that they intend to adopt the child and raise him as their own child and we and each of us by this consent hereby join in any petition that is filed with any court of competent jurisdiction for the adoption of said child.”'
Plaintiff’s signatures on this document were witnessed by. the doctor who delivered the child and it was acknowledged before a notary public for tbe city and county of San Francisco.
No claim is made by defendants tbat the child has ever been legally adopted by them, although proceedings for such adoption were instituted in the probate court of Ottawa county soon after defendants were given tbe custody of the child. Defendants contend that tbe plaintiffs are not suitable persons to have tbe custody of tbe child, and tbat the best interests and welfare of tbe child would best be served by leaving tbe child in tbe custody of tbe defendants. They also contend tbat tbe plaintiffs have effectively released and relinquished their parental rights to tbe custody and control of tbe child through tbe execution of tbe instruments hereinbefore referred to.
Because of tbe seriousness of tbe questions involved, we shall discuss tbe facts peculiar to this case more in detail. Plaintiff William C. Brown has a very fine war record. He is manager of a furniture store in San Francisco and a number of witnesses testified as to bis good character and habits. On the other band, tbe story of plaintiffs ’ domestic life is not a pleasant one. Mr. and Mrs. Brown both testified tbat they were married in 1935 at Tia Juana, Mexico, and tbat because they did not have a certificate of said marriage, and in order to facilitate tbe collection of Mr. Brown’s insurance in case of bis death while in tbe armed forces, they were re-, married in San Francisco on October 9, 1942, and received a certificate. Tbe record shows tbat in 1935 Mr. Brown was married to another woman, who did not obtain a decree of divorce from him until November, 1936, and which divorce did not become final until September, 1938. To refute tbe inference tbat Mr. Brown was a bigamist, bis counsel advances the suggestion tbat possibly a mistake was made in tbe testimony and that the Mexican marriage could have taken place in 1936 or 1937 after the former Mrs. Brown secured an interlocutory decree of divorce. No evidence was introduced to this effect. The trial judge, who saw and heard the witnesses, had the following to say in his opinion:
‘ ‘ As to the moral fitness of petitioners, it is clearly established that both failed to tell the truth relative to their ‘Mexican marriage.’ * * * Petitioners have attempted to deceive the court relative to their ‘Mexican marriage.’ ”
Mrs.. Brown testified on cross-examination that she could not remember whether the Mexican marriage was performed by a priest, minister, or justice of the peace. We believe that the trial court was justified in his conclusion in regard to the “Mexican marriage. ’ ’
Mrs. Brown testified further that after Mr. Brown went overseas, she came to Detroit, where her parents live, and that she became pregnant several months prior to the time Mr. Brown returned. Regarding the cause of her pregnancy, her testimony was to the effect that she had been raped, but the rather flippant manner in which she described the occurrence and the almost overwhelming testimony that the pregnancy was the result of voluntary illicit relations with an undisclosed person while her husband was absent led the trial judge to wholly discredit her story in regard to the alleged rape. The doctor who attended her stated that she told him that the putative father of the child “appealed to me and I had intercourse with him. ’ ’
Further testimony developed the facts that on October 20, 1944, a month before the child was born, plaintiffs engaged Dr. Michelson, a member of the staff of St. Joseph’s Hospital in San Francisco, to deliver the child, that Mr. Brown stated to the doctor he was willing to pay all the hills, but that he was not the father of the cbjild, and they were not going to keep it. The doctor testified in his deposition and also at a hearing in another proceeding-in San Francisco, that Mrs. Brown was present when these statements were made and that she acquiesced therein. He further testified that he had several talks with Mrs. Brown before and after the baby was born in which he urged her to keep the child, but that she stated her husband had told her-she must choose between him and the baby, and that she preferred to keep her husband. The doctor testified that Mrs. Brown definitely decided to give up the baby, and he thereupon informed a nurse, who was the anaesthetist at the hospital, that there was going to be a baby available for adoption.. The nurse wired her sister, defendant Julia DeWitt, and after several long- distance conversations and telegrams, defendants came to San Francisco, were given- the custody of the child and returned at once to Michigan. The nurse had been instructed by the defendants to ascertain the health of the child, et cetera, and if its background was satisfactory to “hire the best attorney you can and get everything exactly the way it should be.” The nurse consulted the judge of the superior court in San Francisco, who acts as the presiding judge of the juvenile department of said court, and she was referred to an attorney who prepared the document hereinbefore referred to which Mr. and Mrs. Brown signed. The nurse was also given instructions as to the procedure to follow. It was not until the defendants were told that everything- was in order that they proceeded to San Francisco to get the baby.
Although plaintiff William C. Brown now joins his wife in the petition for the custody of the child, when be was importuned to keep the child just prior to the execution of the document referred to by him and Mrs. Brown, he absolutely refused to do so in language too filthy to repeat. The purport of what he said is that if he kept the child he might come home some night “in his cups” and, realizing that the child was not his, might do it great bodily harm.
A showing was made that the neighborhood in which plaintiffs have been living is an undesirable one in which to bring up a child. Plaintiffs assert that because of the housing shortage in San Francisco they were unable to obtain a better place, to live at the time, and Mr. Brown testified that he had completed arrangements for the family to move into adequate quarters in a good neighborhood. Regarding this matter, the trial judge said in his opinion:
“The testimony of Mr. Brown in his deposition on November 29, 1945, that he ‘has great love and affection for this child’ and that he has now rented a new home, et cetera, are but childish attempts to deceive. He has never seen the child; insisted on its being given up, and on the face of it, such a statement is false. As Mrs. Brown has remained in Michigan since the early summer of 1945, his claim of renting is more than false; it is silly. Even this naive court cannot believe such statements.”
Testimony was introduced which seriously reflects on Mr. Brown’s conduct while his wife has been away. Respecting the home life of the plaintiffs, Mrs. Brown testified that she did not see her husband for a year prior to the time he entered the service. The doctor, in his deposition, stated that in an interview with Mrs. Brown, she said:
“At one time she said, ‘That s. of a b., I left him once,’ I am not positive as to the date. It was either on the 30th of October or the 14th of November. She said, ‘I loved him once, went home, and divorced him in Michigan. ’ She said, ‘ Son of a bitch. ’ Those are the words that she used. I was surprised that she would use them. I said, ‘I am not interested in that.’ She said, ‘I left him once,’ and then she said, ‘He Game back there, and he persuaded me to remarry him, and I did.’ * * * I said, ‘That doesn’t mean anything. He was willing to come back to you that time. You can take that baby and wrap it around his little finger.’ * * * But it didn’t make any impression upon her at all; it didn’t make a bit of an impression on her; she didn’t want the baby.”
We shall not review the other testimony reflecting on petitioners and tending to show that the judge was correct in reaching the conclusion that the welfare of the child requires denial of the petition.
Defendants, because of the difficulty in securing railroad accommodations at the time, took advantage of an opportunity to return to Michigan the day after they obtained the child. They have no children of their own. They brought the baby into their home, have given it. the most loving care and attention and are attached to it the same as if it were their natural child. They have spent over $3,000 in connection with obtaining the child and providing for it. They are people of the highest character; they enjoy the respect of the community in which they live; and they are able and anxious to give the child a fine home, parental love and affection, and bring it up in the very best moral and social environment. Lest there be any misunderstanding, we state the fact that defendants financially are much better off than plaintiffs does not affect our determination.
Plaintiffs assert that they did not know what they were signing when they executed the “Consent to Adoption” form. Mr. Brown is a business man who manages a large store. The signing of the form was the outcome of previous conversations in which both plaintiffs refused to keep the child although they were urged to do so. The testimony clearly shows that they knew what they were doing, and that their signatures were not obtained by fraud, duress or mistake. The trial judge found:
“Whatever may or may not be the ‘legal’ effect of this paper, it is the opinion of this court that plaintiffs executed it understandingly. They knew what it was and what its purpose was.”
A reading of the entire record leads us to the same conclusion. Regarding the legal effect of this document, ample authority is cited in 27 Am. Jur. p. 832, Infants, § 110, for the following statement:
“If the parent has made an agreement with another person surrendering to him the custody of the child, such agreement may have much weight as showing the unfitness of- the parent and estopping him from seeking to repudiate a fair and beneficial agreement; but it will not be enforced as a binding agreement unless it is for the benefit of the child. The language of the opinions on this topic differs, some courts holding such an agreement void as against public policy, and others treating it as presumptively valid; but most, if not all, of the decisions can be reconciled by applying the test whether the agreement in question is favorable or unfavorable to the interests of the infant.”
As a rule the custody of a child will be left with the natural parent. This, however, is not an absolute rule, and if the circumstances are such that it would not be for the good and welfare of a child to take it away from third parties and give it to the' natural parent, the custody with the third parties will not be disturbed.
In Re Gould, 174 Mich. 663, a leading case often referred to in this State, the Court said at page 669:
“But the absolute power of the father over his infant children, to treat them as property and dispose of them as he sees fit because they are his, which was once recognized under the Roman law of patria potestas and in the codes of early nations, no longer obtains. Parental authority is subordinate to the supreme power of the State. Every child born in the United States has, from the time it comes into existence, a birthright of citizenship which vests it with rights and privileges, entitling it to governmental protection.
“ ‘And such government is obligated by,its duty of protection, to consult the welfare, comfort, and interests of such child in regulating its custody during the period of its minority.’ Mercein v. People, ex rel. Barry, 25 Wend. (N. Y.) 64 (35 Am. Dec. 653.)
“The power of parental control, though recognized as a natural right and protected when properly exercised, is by no means an inalienable one. When the ‘right of custody’ is involved between respective claimants for a child, the courts, though in the first instance recognizing prima facie rights of relationship, in the final test are not strictly bound by demands founded upon purely technical claims or naked legal rights, but may and should, in making the award, be governed by the paramount consideration of what is really demanded by the best interests of the child. Corrie v. Corrie, 42 Mich. 509; In re Heather Children, 50 Mich. 261; Chapsky v. Wood, 26 Kan. 650 (40 Am. Rep. 321); Richards v. Collins, 45 N. J. Eq. 283 (17 Atl. 831, 14 Am. St. Rep. 726).”
The superior right of the parents to the child should only be enforced when it accords with the best interest of the child. In re Solosth, 157 Mich. 224; In re Knott, 162 Mich. 10; Martin v. Benzie Circuit Judge, 200 Mich. 549; Greene v. Walker, 227 Mich. 672.
In Riede v. Riede, 300 Mich. 300, Mr. Justice Boyles speaking for the Court said:
‘‘ The right of the mother to have the custody of a child under 12 years of age, by virtue of the statute (3 Comp. Laws 1929, § 12852 [Stat. Ann. § 25.311]), is not absolute. The wishes of the parents are a secondary consideration. The welfare of the child is paramount. Weiss v, Weiss, 174 Mich. 431; Smith v. Ritter, 292 Mich. 26. The court may award custody of the child to a third person and require the father to pay for her support. Revised Statutes 1846, chap. 84, § 17a, as added by Act No. 255, Pub. Acts 1939 (Comp. Laws Supp. 1940, § 12739-1, Stat. Ann. 1941 Cum. Supp. § 25.97[1]).”
Also, see Riemersma v. Riemersma, 311 Mich. 452.
The trial court came to the correct conclusion, and we affirm his order denying the petition for habeas corpus and dismissing the writ. Defendants will recover costs.
Bushnell, C. J., and Sharpe, Boyles, Reid, North, and Carr; JJ., concurred. Dethmers, J., did not sit. | [
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Bushnell, J.
The Super Realty Company issued bonds, secured by a trust mortgage on land in Washtenaw county, the First National Bank of Ann Arbor being named therein as trustee. Each of the bonds contained the following provision:
“For value received, we, Ray Dolph, J. Fred Wuerth and Samuel O. Davis, being the owners of more than Ys of the capital stock of the Super Realty Company, do hereby guarantee the trustee of the within mentioned mortgage the punctual payment, when due, whether at maturity or at an accelerated or extended date, of the principal of the within bond and the interest thereon, according to the tenor thereof and of the coupons thereto belong' ing, respectively, for the benefit of the holder thereof. Diligence and notice shall not be required; nor shall any change in any provision of said bond or mortgage or any indulgence in anywise affect the obligation hereof, whether made or granted with or without notice; the obligation hereunder shall be absolute and primary and performable on demand. ’ ’
This undertaking was signed by Ray A. Dolph, J. Fred Wuerth and Samuel O. Davis, the defendants herein. Dolph is president of the Super Realty & Mortgage Loan Company, formerly the Super Realty Company, and is the owner of all of the capital stock of the corporation with the exception of two shares. In 1929 he purchased the interests of Wuerth and Davis and made an oral agreement with them which purported to release them from any and all liability on the bonds of the Super Realty Company. In 1931 Dolph entered into an arrangement with William L. Walz, then president of the Ann Arbor Savings Bank, whereby the bank agreed to advance $12,000 for the purpose of purchasing outstanding Super Realty bonds, the bank then holding Dolph’s individual and direct obligations totalling $26,030, which were inadequately secured. The bank subsequently acquired $35,000 worth of bonds by the use of a part of the proceeds of the $12,000 loan to Dolph. The transaction resulted in the combining of Dolph’s old and new loans into a new obligation, evidenced by his $37,500 note, the bank holding as security therefor other property and Super Realty bonds having a face value of $33,500. In 1936 these bonds and a number of other securities then held by the bank were transferred to the Federal Deposit Insurance Corporation in consideration of a loan amounting to over $2,000,000, which was made in order to enable tbe newly-created Ann Arbor Savings & Commercial Bank to purchase all of tbe assets and assume tbe deposit liability of tbe Ann Arbor Savings Bank. "When tbe Super Realty bonds were transferred to tbe Federal Deposit Insurance Corporation on February IN, 1936, only tbe interest coupons maturing June 1, 1936, and subsequent thereto, were attached..
"While it is claimed by defendants that tbe Federal Deposit Insurance Corporation bad knowledge of tbe purported oral release of Wuertb and Davis, tbe affidavit of Walz indicates that, though this was known to him at tbe time tbe Ann Arbor Savings Bank accepted the bonds as collateral, so far as be knew, no one connected with the bank ever mentioned tbe matter to tbe Federal Deposit Insurance Corporation prior to tbe transfer of tbe bonds. Bruce P. Greene, tbe liquidator of tbe Federal Deposit Insurance Corporation, stated that tbe first time be learned anything about tbe claimed release was a few days after be, on behalf of tbe Federal Deposit Insurance Corporation, bad requested tbe First National Bank & Trust Company of Ann Arbor, formerly First National Bank of Ann Arbor, as trustee of tbe bond issue, to make demand for payment of tbe full amount of tbe bonds and interest upon Dolph, Wuertb and Davis, and, in tbe event of failure of such payment, then to take such proceedings as mig'bt be desirable and necessary. Greene further stated that, notwithstanding an examination of tbe books and records of tbe Ann Arbor Savings Bank, be was unable to obtain any information with respect to tbe claimed oral release. Tbe Federal Deposit Insurance Corporation insists that it is a good faith bolder for value of the bonds in question.
Plaintiff, as trustee under the bond issue, upon the written request of the Federal Deposit Insurance Corporation, present holders of the bonds, filed a declaration seeking* a judgment against defendants, which was met by separate motions to dismiss on behalf of defendants Dolph and Wuerth. Bonds totalling $33,500 in amount, in the hands of the Federal Deposit Insurance Corporation, and two bonds totaling $1,500, in the hands of the First National Bank & Trust Company, were received in evidence.
The court considered the facts as disclosed by various affidavits, the briefs filed by respective counsel, and found that defendant Dolph fully disclosed to the officers of the Ann Arbor Savings Bank, when the bonds were pledged by him, that ‘ ‘ all of the defendants in this cause were discharged from liability under said bonds and said bonds were accepted as collateral with such understanding*.” The court further found that Dolph was discharged from personal obligation thereunder by operation of law and that the Federal Deposit Insurance Corporation was not a bona fide purchaser for value and without notice, in that the bonds “are held as collateral to the personal loan of Ray A. Dolph.”
The circuit court also stated that:
“The purchase of such bonds by Ray A. Dolph discharged his personal obligation thereunder, and a discharge of one joint guarantor is a discharge of all.
“ ‘ A person cannot be both the obligor and the obligee in a bond, even in connection with others, or in another capacity; and a bond so executed is unenforceable so far at least as it affects one who occupies thereunder this dual relation.’ 9 C. J. p. 10.
“The release of a joint or joint and several guarantors or indorser releases the remaining guarantor or indorser from further liability. Seligman v. Gray, 66 Mich. 341."
An order of dismissal was entered, from which plaintiff appeals.
In describing defendants the court used the terms “surety” and “guarantor” interchangeably.
“While a surety and guarantor are not the same in all respects, they are similar in the particular that each promises to answer for the debt or default of another, the surety assuming liability as a regular party to the primary undertaking, while the guarantor does not, but his liability depends upon an independent, collateral agreement by which he undertakes to pay the obligation if the primary payor fails to do so. The authorities, in discussing certain principles common to both, often use the terms interchangeably.” In re Kelley’s Estate, 173 Mich. 492 (Ann. Cas. 1914 D, 848).
So tested, defendants appear to be sureties on the bonds.
Appellees argue that plaintiff, as trustee of a real estate trust mortgage, does not have the right to sue upon the “guaranty,” it being a part of a negotiable bearer bond, to which plaintiff has no title and of which it is not the holder, and is not given any exclusive right to bring the action by the collateral trust instrument. Defendant Dolph questions the right of the trustee to bring suit against him on his personal “guaranty” on bonds of which he is the owner. Deference to the quoted language of the undertaking shows that it runs to the trustee:
“Do hereby guarantee the trustee of the within mentioned mortgage * * * for the benefit of the holder thereof.”
A party with whom or in whose name a contract has been made for the benefit of another may sue in his own name without joining with him the party for whose benefit the action is brought. 3 Comp. Laws 1929, §14010 (Stat. Ann. §27.654). The instant action was begun at the written request of the Federal Deposit Insurance Corporation, a bondholder, and such action is contemplated by the cited statute.
It is argued, on the basis of a broad statement in 47 C. J. p. 39, that, before a trustee can sue, he must have an unconditional title. Either this trustee or the holder of these bonds may sue defendant sureties upon their promise. 2 Comp. Laws 1929, § 9300 (Stat. Ann. § 19.93); Mendelson v. Realty Mortgage Co., 257 Mich. 442.
The trial judge’s finding that the Federal Deposit Insurance Corporation was not a bona fide purchaser for value and without notice of the oral release is not supported by any testimony in the record. If it is a bona fide holder for value of the bonds as collateral security for a loan without notice of any infirmity therein, it should be protected. First National Bank of Niles v. Shue, 119 Mich. 560. There was nothing upon the face of the bonds to put the Federal Deposit Insurance Corporation on notice, and there is no showing in this record that it or the trustee had any information as to the oral release.
We are unwilling to agree with the circuit court’s holding that, under the facts presented by this record, the oral agreement between the sureties was sufficient to release any of them from liability from their undertaking when the party who purported to give the release pledged the bonds containing his promise and that of others to a bank which in turn transferred them to another without notice of any claim of such release.
The basis for the trial judge’s decision seems to be that the purchase of the bonds by Dolph dis charged his personal obligation thereunder and that his discharge effected a discharge of his cosureties. The trial court relied upon a broad statement in 9 C. J. p. 10, to the effect that a person cannot, at the same time, be a joint obligor and obligee in a bond, and that such an undertaking is unenforceable, and, as to the release of the other sureties, gave as its authority Seligman v. Gray, 66 Mich. 341. Seligman brought an action on the common counts upon a note of which Gray was maker and Adams and Freeman were joint indorsers. No judgment was taken against Gray and the defense of the indorser? was failure of presentation and lack of notice of dishonor. The trial court directed a verdict in favor of Freeman and against Adams. This court held that “it is well settled law that there must be, in a joint action, a joint judgment, or no judgment at all,” and that, “unless both could be held, * * * neither could be.”
This case is not authority for the proposition stated by the trial judge, for if the bonds in question were in the first instance the sole obligation of Dolph, his guaranty of them would have been an idle ceremony. They were in fact the obligation of a corporation whose liability was separate and distinct from that of Dolph, the individual. When Dolph, the surety, acquired ownership of the bonds, the separation of maker and surety still remained and the instrument was not discharged by operation of the law in that the principal debtor did not thereby become the holder of the instrument.
Appellee Dolph cites the Seligman Case and 28 C. J. p. 993, which says that:
“A guarantor is discharged by operation of law from further liability by any act on the part of the guarantee which extinguishes the principal con tract, or by payment of the principal obligation by the guarantor; or by the guarantor becoming the holder of the principal obligation, except where he becomes the holder thereof for a limited purpose only, such as that of collection. ’ ’
Dolph acquired the bonds for the limited purpose of pledging them with the Ann Arbor Savings Bank, which accepted them as security for a loan and subsequently transferred them to the Federal Deposit Insurance Corporation. There is nothing in the record to show that the bank intended to look only to the maker or the underlying security except the affidavit of one of its former officers, Walz, who said that Dolph informed him that Wuerth and Davis had been discharged from all personal liability thereunder. In a subsequent affidavit, made because the statements in his former affidavit were “inadequate and incomplete,” Walz carefully avoided a repetition of his former statement with respect to the release of the sureties. We quote from the second affidavit of Walz as follows:
“As a matter of fact, this deponent’s personal knowledge of the matters relating to the arrangement between Ray A. Dolph and the other guarantors of said bonds extends only to this: That at one time Ray A. Dolph and his wife had joined together in the execution of a bond, note or some form of indemnity instrument in favor of J. Fred Wuerth and Samuel O. Davis for the purpose therein expressed as this deponent recalls of indemnifying and saving J. Fred Wuerth and Samuel O. Davis harmless in respect to their liability upon the guarantee of said bonds, which indemnity instrument had been left with this deponent in escrow and had remained in the hands of this deponent in escrow for some years prior to the transactions above related and continued to remain in the hands of this deponent until sometime after all of the said Lakewood bonds had been purchased from the bondholders and delivered to the Ann Arbor Savings Bank as above related when, at the direction of the parties, this deponent surrendered said indemnity instrument.
“This deponent was informed that the surrender of said indemnity instrument was required for the purpose of releasing the said guarantors from liability upon said guaranty, but this deponent’s best recollection is that the consent of the Ann Arbor Savings Bank to such a release was never given in writing, nor was there any effort made by anyone to indicate anything to that effect upon any of the bonds which were then in the possession of the Ann Arbor Savings Bank, as pledgee.
“It is also the best recollection of this deponent that no record was ever made in the Ann Arbor Savings Bank either of the escrow or the indemnity instrument because it was not a bank escrow or of the claim of the guarantors about being released from liability upon the guaranty and so far as this deponent knows no one connected with the Ann Arbor Savings Bank ever mentioned anything about these matters to anyone connected with the Federal Deposit Insurance Corporation at any time prior to the transfer of said bonds to the said Federal Deposit Insurance Corporation. ’ ’
The trial judge reached an erroneous conclusion and the order dismissing the cause should be vacated and the cause remanded for further proceedings not inconsistent herewith. It is so ordered, with costs to appellant.
Wiest, C. J., and Butzel, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred. | [
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North, J.
Defendant has appealed from an award of compensation made to plaintiff who claims disability resulting from an accident arising out of and in the course of his employment by defendant. The department found the accident happened June 21, 1935, notwithstanding defendant’s claim that the accident, if any, happened in October, 1935. The date is of consequence because defendant filed report of a noncompensable accident to plaintiff October 12, 1935; and if plaintiff were seeking compensation incident to this accident, he could not obtain an award because of his failure to demand compensation within six months after the happening of the accident. There is testimony in the record tending to sustain the determination of the department as to the date of the accident and, therefore, we must abide by the finding made. The defendant filed no report of plaintiff’s having sustained an accident in June, 1935. Plaintiff’s testimony is that while lifting crankshafts, weighing 70 to 80 pounds, off of a conveyor line, incident to which he had to reach up over his left shoulder and lower the crankshafts to the floor, his right foot slipped on the wet floor, straining his back and right side. Plaintiff reported the injury to his foreman and was sent to the first aid where he received treatment. He continued to work through June and July but on July 28th was transferred to a lighter bench job. He took the month of August off from his work because he wanted to go south and because his back was hurting him. He returned to his work in September and continued through October but did not work very regularly because his back was still troubling him. He was released from his employment by defendant November 7, 1935. Prom November until the following June plaintiff worked at the Motor Products Corporation. He then went south again and returned the following September. In October, 1936, he began working at the Hudson Motor Car Company and continued in its employment until the latter part of November. In January, 1937, he en tered Harper Hospital where he was placed in a body cast' which extended from his shoulders to the base of his spine. He was still wearing the cast at the date of the hearing, June 28, 1937. From May, 1937, to June 4, 1937, he was again in the employ of the Hudson Motor Car Company. He has not worked since and he claims that since the injury his condition has been continuously growing worse.
Plaintiff’s physician diagnosed plaintiff’s condition as arthritis of the spine; and the physician also found that plaintiff had some bad teeth accompanied by pyorrhea. The department found that the accident sustained by plaintiff caused his disability and that proper notice had been given as required by statute. 2 Comp. Laws 1929, § 8431 (Stat. Ann. § 17.165). Defendant on this appeal presents the following questions:
(1) Did the plaintiff give defendant adequate notice of the accidental injury claimed by him within the time required by the workmen’s compensation law?
(2) Was the plaintiff suffering from- any compensable disability at the time of the hearing before the deputy commissioner?
(3) Was the plaintiff, at the time of the hearing before the deputy commissioner, suffering from any disability as a result of an accidental injury?
At the hearing before the deputy commissioner appellant admitted that it did not file with the department any report of an accident to appellee in June, 1935; and appellant denied having had notice or knowledge of the alleged accident within three months from its happening. This is contrary to plaintiff’s contention. Claim for compensation was not filed until February 2, 1937. Both the deputy and the department on review found appellant had notice of the accident within the three-months’ statutory period. 2 Comp. Laws 1929, § 8431.
‘ ‘ The requirement of the statute that the employer must receive notice of the accidental injury within three months of its occurrence is a substantial right and not one to be disregarded. ’ ’ Maki v. S. J. Groves & Sons, 279 Mich. 644.
Decision of this appeal turns upon whether the record contains any evidence tending to support the department’s finding that defendant had notice or knowledge of the accident within the three-months’ statutory period. The substance of all of the material testimony on this question is covered by the following, which we quote from the department’s opinion:
“Q. When did you (plaintiff) first report this injury and the accident to the Plymouth Motor Car Co.?
“A. At night.
''Q. Where?
“A. To my foreman or job setter and the first aid.
“Q. What did you tell them?
“A. I told them I hurt my back. * * *
“Q. Did you go to the first aid department?
“A. Yes.
“Q. What did you tell them?
“A. I told them I hurt my back. Strained my back.
“Q. Did they ask you any questions as to how you strained it?
“A. Yes, I believe they did.
“Q. What did you tell them?
“A. I told them I hurt it lifting crankshafts off the conveyor.”
A careful review of this record fails to disclose any testimony tending to show that within three months next following plaintiff’s alleged injury in June, 1935, defendant had notice or knowledge such injury resulted from his having accidentally slipped on the wet floor while handling crankshafts.
Plaintiff’s foreman, a witness for the defendant, testified as quoted by the department:
“Now, that man never told me he slipped — he was hanging crankshafts on the conveyor and got a catch in his side and I sent him to the first aid. * * *
“Q. And he says he told you that he hurt himself lifting a crank case (shaft) off the conveyor. Is that what he told you?
“A. That’s the way he explained it, that he hurt himself lifting a crank off the conveyor.”
In this State the law is settled that if the injury of which plaintiff complains was occasioned merely by his lifting something heavy in the regular course of his employment, there was no accident and plaintiff is not entitled to an award of compensation. Williams v. National Cash Register Co., 272 Mich. 553; Waites v. Briggs Manfg. Co., 280 Mich. 185; Nagy v. Continental Die Casting Corp., 283 Mich. 162. The burden is upon plaintiff to show the happening of an accidental injury arising out of and in the course of his employment; and further the burden is upon plaintiff to show that within three months after the happening of such an accident the defendant employer had notice or knowledge thereof. 2 Comp. Laws 1929, § 8431. It is not enough that within the statutory period the employer has knowledge that during his hours of employment the employee has become ill or even that he has suffered an injury which was not compensable.
In Gumtow v. Kalamazoo Motor Express, 266 Mich. 16, we said:
‘ ‘ The notice required to be given to the employer is notice of an accidental injury arising out of and in the course of employment. * * * Although there is no doubt but that the latter (the owner of the defendant company) knew that the plaintiff took sick on the trip, and was ill for a considerable period thereafter, and also was aware of the condition of plaintiff’s hand and arm (plaintiff having testified he injured his hand while changing a tire on defendant’s truck), a careful review of the entire testimony shows beyond any question that the employer had no knowledge that there had been an accident until some time in February, more than three months later. While it is true that the act is to be liberally construed in favor of the employee, and in so doing we have gone far in disregarding inaccuracies in notice, * * * we cannot disregard the plain requirement of the statute that the employer must receive notice of the accident within the three-months’ period. This is a substantial right and, as stated in the act, is a condition precedent to the establishment of a claim for compensation,”
See, also, Littleton v. Railway Co., Inc., 276 Mich. 41, and Maki v. S. J. Groves & Sons, supra.
There being no testimony in this record tending to sustain the department’s determination that defendant had notice or knowledge of the alleged accident within three months after its happening, the award must be vacated. It is so ordered, with costs to appellant.
Wiest, C. J., and Butzel, Bushnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. | [
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North, J.
Defendants are trustees of the segregated assets of the Otisville State Bank, and as such they represent the bank’s unpaid depositors. Plaintiff is executrix of the estate of Charles D. Parker, who died December 11,1934. Formerly he had been president, a director, and active officer of the Otis-ville State Bank, and later was appointed conservator of the closed bank. When the bank suspended Charles Parker had a substantial sum on deposit, and for his services as conservator his compensation was fixed at $3,000. Because of the refusal of defendants to pay the administratrix either of these items she brought this suit. Other matters originally involved in the litigation, but which have been settled and therefore need not be detailed, account for plaintiff’s proceeding in equity by bill for partition, accounting and general relief. The reason that defendants refuse to pay the items claimed by plaintiff is that they assert certain counterclaims. Plaintiff denies the validity of defendants’ claims, thereby giving rise to this suit. In the circuit court plaintiff had decree and defendants have appealed.
When this bank closed because of the bank holiday proclamation on February 14,1933, among its assets was a promissory note dated October 30, 1932, for $4,847.15, due six months from date, payable to the bank and signed by Charles D. Parker. This was a renewal note and is part of the bank’s segregated assets now held by defendant trustees. The history of this note in brief outline is as follows: In April, 1929, the bank held a second mortgage on a 132-acre farm, title to which was in a Mr. E. E. Hunger and wife. This second mortgage for $3,000 was given to the bank by the Mungers to secure the payment of indebtedness to it of a Mr. Coon, who formerly was a director of the bank. After Mr. Coon’s death his heirs deeded the farm, subject to a $6,000 first mortgage, to the bank, which in turn deeded to the Mungers. In the trial court this mortgage transaction is referred to as the “Coon loan” and the mortgaged property as the “Coon farm.” The Mungers deeded the farm to Christian Metz in February, 1931. As part consideration for this conveyance the bank released the second mortgage which the Mungers had given it on the property and also canceled two of Mungers’ notes held by the bank. At the same time there was placed in the bank a so-called “cash item” in Metz’ name for $4,545.93, this evidently being in lieu of the amount of the second mortgage, of Mungers’ two.notes to the bank, and some other items. It should be noted that both Metz and Hunger were directors of the bank. On April 2, 1931, Metz and wife deeded the farm to Charles D. Parker and simultaneously the Metz “cash item” was withdrawn from the bank and the original note of Charles D. Parker dated April 8, 1931, in the amount of $4,847.15, was given to the Otisville bank. This note was renewed from time to time, the last renewal being the Parker note for $4,847.15 now in the possession of the defendant trustees.
This note was submitted by the trustees as a claim against the Charles D. Parker estate, and on its face it purports to be a valid obligation. But it is the claim of the appellee, notwithstanding Charles D. Parker took the record title of the farm in his name, and gave his note to the bank in lieu of other obligations held by the bank as above noted, that this was a mere matter of convenience in handling the transaction for the bank, that Parker took and held title to the farm as a trustee for the bank, and that the board of directors of the bank were fully aware of the true nature of this transaction. We quote the following from appellee’s brief:
“The matter of the Hunger line out of which grew the Parker note of $4,847.15, had been a sore spot between the Otisville State Bank and the banking department for some time. (See) report and examination of the Otisville State Bank as of October 8, 1930.”
Appellee also points out that after Mr. Parker became conservator of the bank the actual status of this so-called Parker note was reported to the State bank examiner, that later Mr. Parker was duly discharged and released as conservator, that his stipulated salary for such service was $3,000, that there is no evidence that the banking department ordered any set-off of this note against the deposit of Mr. Parker in the bank or against his salary as conservator. Under the circumstances appellee contends there was no consideration for the Charles D. Parker note, that the transaction hereinbefore outlined was one carried in Parker’s name but only nominally so, that the actual party in interest was the bank, and further that the trustees of the segregated assets are in the same position as the bank itself in so far as the matters in suit are concerned.
We omit other facts disclosed by the record, some of which tend to prove that Charles D. Parker was the actual owner of the farm, in which event his note would be a valid obligation; but on the other hand some of such omitted facts tend to prove appellee’s claim that the bank was the actual owner of the farm, that title to this property never vested in Charles D. Parker, and that the Parker note was without consideration. The circuit judge concluded that appellee’s contention on this issue of fact was sustained by the record. We quote in part his opinion in review of the factual aspect of the case:
“After Charles Parker, deceased, became conservator, there were statements made by the Otis-ville State Bank to the banking commissioner that the Coon loan, so-called, had been taken care of, and the report to the banking commissioner, in its place showed the note of something over $4,000 as an asset of the bank which Charles Parker had given in exchange for the deed from Metz of the Coon farm.
“The dealings of the bank throughout do not smack of a very commendable transaction relative to the Coon obligation, and the manner in which the bank had carried it on its books and its conduct relative thereto. It is the claim * * * that the transaction was for the purpose of- deceiving the banking commissioner who was complaining of this indebtedness, and for the purpose of showing a financial condition of the bank better than it really was. * * * And later on we have the transfer from Christian Metz to Charles Parker to carry the property in such a manner to continue the deceit on the banking commissioner to show the assets of the bank to be in a better condition, and that the Coon obligation had been properly taken care of: * * * And the bank made its statements of the condition of the bank to the banking commissioner containing the notes of Charles Parker as an asset of the bank, and that same statement was known by said Charles Parker, that such deception was being a part of the bank’s transaction with the banking commissioner.
“The court believes that the statement made by the Otisville State Bank to the banking commissioner at Lansing, Michigan, whereby they had changed the indebtedness of the so-called Coon loan to that of a note of Charles Parker, now deceased, was done for the purpose of deceiving the said banking commissioner. * * *
“The court finds that the testimony discloses that there were no creditors as far as the segregated assets are concerned, which the bank is charging against Charles Parker, deceased; and that no innocent person had suffered. The only one party deceived was the banking commissioner, as the bank never published in any form, by notice in the paper or otherwise, the condition of the Otisville State Bank.
“The court therefore finds * * * (that the title to the Coon farm) was held and intended to be held by said Otisville State Bank and by said Charles Parker as trustee for the bank, for the purpose of deceiving the banking commissioner.”
The conclusion finally reached by the circuit judge was that because both the bank and Charles D. Parker were parties to perpetrating fraud upon the banking commissioner, and since no innocent creditors of the bank suffered loss in consequence of such fraud, Parker’s obligation evidenced by the note should not be enforced. This conclusion cannot be sustained.
These trustees are possessed of certain segregated assets which it is their duty to liquidate for the purpose of obtaining funds with which to satisfy the claims of unpaid" depositors. There are not enough of such assets to pay the depositors in full, hence it cannot be said there are “no creditors as far as the segregated assets are concerned,” or more specifically so far as this Parker note is concerned. Instead the bank’s creditors, which include its unpaid depositors, are materially concerned in the determination of whether the Parker note is or is not a valid and collectible obligation in the hands of the trustees. Decision herein must be reached in the light of this situation.
From April, 1931, until the bank closed February 11, 1933, it held the Parker note as one of its substantial assets. It is to be presumed that because of this asset, in part as least, the bank was permitted by the State banking commissioner to continue in business during this period. In the absence of proof establishing such to be the fact, it cannot be said that this course of action on the part of the bank has not resulted to the prejudice and loss of the unpaid depositors of this closed bank, if the note is now to be held unenforceable. Instead the contrary seems apparent.
This record presents a legal aspect which controls disposition of the appeal. A defense that a note was given to replace questionable assets for the purpose of deceiving the State banking department is contrary to law and public policy. The maker of such note is estopped from denying liability on the ground of its fictitious character. 4 Zollmann on Banks and Banking (1st Ed.), p. 516, § 2526. In vol. 7, p. 284, | 4783, that author states:
“A plea of the illegal contract not to hold the maker of the note does not overcome the presumption that the note was given for a valuable consideration. The inevitable effect of such a note is to deceive the bank examiner as to the true condition of the bank and through luring him into a false secu rity deceive the creditors themselves. Such an agreement therefore, certainly as to creditors, is void as being against public policy.
“Every depositor has the right to rely on the notes of the bank as legal, binding, and valid, and any secret collusive agreement between the maker and a bank officer that the bank will not hold the maker liable is invalid, null, and void. In addition, it varies, qualifies, contradicts, adds to, or subtracts from, the written terms of the contract as evidenced by the note.”
In Lyons v. Benney, 230 Pa. 117 (79 Atl. 250, 34 L. R. A. [N. S.] 105), defendant executed his note in favor of the bank on an agreement that he would not be liable thereon. This note was to be exhibited to the bank examiner in place of a less desirable asset thereby deceiving the banking authorities. In its opinion, the court said:
“So this appellant was a party to a scheme of the officers of the bank to enable them tó make a deceptive and fraudulent showing of assets, and as the fraud was perpetrated upon the creditors, now represented by the bank’s receiver he can maintain an action on the note for their benefit. * * *
“In People’s Bank v. Stroud, 223 Pa. 33 (72 Atl. 341) * * * the decision against them (defendants) rested, after all, upon the underlying principle that one who voluntarily gives his obligation to a bank for the purpose of taking up another obligation, and of being exhibited as one of its assets to a supervising officer of the government having supervision and control of its affairs, is estopped to deny want of consideration upon the insolvency of the bank when a receiver brings an action upon the note for the benefit of the creditors of the institution. Neither the law nor good conscience can sanction the contention of the defendant that he ought to be permitted to take advantage of the fraudulent agreement between him and the bank to which its cred itors were not parties and for whom the receiver sues. ’ ’
Banks are examined to determine their condition, reports of their stability are published for the benefit of the creditors and the public, and any attempt to replace undesirable assets with a note coupled with an agreement that the maker is not to be liable thereon will not be permitted to nullify the purpose of the law to the prejudice of the bank’s creditors. They are entitled to have the capital remain unimpaired. It was to this end, in the instant case, that the note was executed and placed among the bank’s assets; consequently the defense based on such an agreement is a nullity. Heath v. Turner, Special Deputy Banking & Securities Commissioner, 256 Ky. 715 (77 S. W. [2d] 9). Courts in various jurisdictions have repeatedly refused to enforce such agreements. On the contrary, they have enforced the obligations as they appeared in the bank’s portfolio. Markville State Bank v. Steinbring, 179 Minn. 246 (228 N. W. 757); German American State Bank v. Watson, 99 Kan. 686 (163 Pac. 637); Prudential Trust Co. v. Moore, 245 Mass. 311 (139 N. E. 645); Skagit State Bank v. Moody, 86 Wash. 286 (150 Pac. 425, L. R. A. 1916A, 1215); Jewett v. Herr, 86 Ind. App. 392 (156 N. E. 568).
The defense that Charles D. Parker was merely handling this item for the bank without personal responsibility operates as a fraud on the bank’s creditors and opens the door for banking practices contrary to the policy of our banking law. On its face the note was valid. It was used to strengthen the bank. Under the circumstances here disclosed the note must be held to be a valid obligation of the Charles D. Parker estate.
The remaining claim which the defendant trustees make against the Charles D. Parker estate concerns the indebtedness to the bank of one J. M. Moyland. At the time of the bank holiday Moyland was indebted to the Otisville State Bank on two notes, one for $3,598.32 and the other for $1,000. The latter was secured by a chattel mortgage on farm crops. In July, 1934, while Charles D. Parker was serving as conservator of the bank, he advised the State banking commissioner that the bank conld obtain $650 as settlement in full of the Moyland indebtedness. The commissioner declined to approve the suggested settlement in full satisfaction of the Moyland notes, and only authorized acceptance of the $650 as payment on account. Moyland did not make the payment. Later (October 15, 1934) the bank received and accepted in full satisfaction of the $1,000 note and chattel mortgage $858.98. This money came from the Federal Land Bank.' It is fair to infer from the record that in securing a refinancing farm mortgage loan from the Federal Land Bank, it required Moyland to use the money thus obtained in paying prior mortgage incumbrances, including the Otisville State Bank’s chattel mortgage on the farm crops, at a discounted figure.
It is claimed by the defendant trustees that Charles D. Parker, in violation of the order of the State banking commissioner, surrendered both of the Moyland notes, that thereby the bank suffered a loss to the extent of the unpaid principal and interest, and that the estate of Charles D. Parker should be held liable therefor. This contention is based upon the proposition of law that an agent who violates the order of his principal is liable to the principal for a resultant loss. See 1 Mechera on Agency (2d Ed.), p. 912, § 1245. The trial judge found that this claim was not established by the testimony. This holding was correct. It was proven that after the death of Charles D. Parker these notes were in the possession of the Flushing National Farm Loan Association, this appearing to be the local agency through which loans were secured from the Farm Loan Bank, and by its employees these notes were delivered to Mr. Moyland and his receipt taken therefor. The record shows that Moyland does not claim his note in the larger amount has ever been paid. Instead he has offered in writing to deliver new notes to the bank for this debt, but at a somewhat discounted figure: i. e., $3,500. The trial judge was right in holding that this claim of the trustees was not established. It was not proven that Mr. Parker violated or disregarded any order or direction of the State banking commissioner.
Appellants have presented other questions, but their consideration is not - necessary to decision herein. The decree entered in the circuit court in chancery will be vacated and one entered in this court by which it shall be adjudged:
(1) That the Charles D. Parker note is a valid and binding obligation;
(2) That the defendant trustees shall set off the amount due on the Charles D. Parker note against the sums otherwise payable by the bank to the Charles D. Parker estate; and
(3) That the claim of the trustees against the Parker estate arising incident to the Moyland notes is disallowed.
Neither party has fully prevailed in this litigation, and therefore the decree will provide that neither will have costs against the other in either court.
Wiest, C. J., and Bttshnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. Btjtzel, J„ did not sit. | [
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Bushnell, J.
This is an appeal from two circuit court orders. The first, dated April 21, 1938, dismissed a writ of garnishment issued on October 16, 1937, against Chrysler Corporation and released and discharged the garnishee defendant; the other, dated April 28, 1938, released the same garnishee defendant from the effect of a writ dated January 20, 1938.
On January 12, 1937, plaintiff began a personal action against defendants upon an express contract, claiming damages in the sum of $63,894.30. On the same date plaintiff filed an affidavit for writ of garnishment before judgment against the Detroit Bank, the Commonwealth Commercial State Bank, the Manufacturers National Bank of Detroit, the National Bank of Detroit, and the Chrysler Corporation. All of the banks, except the Manufacturers National Bank, made a disclosure of no indebtedness and the Manufacturers disclosed that R. K. Lee, one of the defendants, and Florence L. Lee (his wife) had borrowed $3,000 on a 30-day note, maturing February 3, 1937, and secured by a certificate for 150 shares of Chrysler Management Trust, the certificate for same being registered in the name of R. K. Lee. The bank said that it did not know who was the owner of the shares and it demanded a trial of the statutory issue. This disclosure was filed on January 29, 1937. On July 14, 1937, the parties stipulated that the service made upon the Chrysler Corporation on January 13, 1937, by delivery of a copy of the writ of garnishment to R. K. Lee, might be quashed and held for naught, and that the default entered against the Chrysler Corporation might be set aside and the proceedings discontinued as to Chrysler Corporation. An order was entered in accordance with this stipulation.
On June 15,1937, a motion was made for an order directing the Manufacturers National Bank to release to the principal defendant, R. K. Lee, the certificate for 150 shares of Chrysler Management Trust on the theory that such property was not garnishable under the statute. On September 27th an order was entered releasing this property for delivery to Lee. This was followed with a motion to set aside the order and for a rehearing. A counter-motion was filed by the bank and plaintiff’s motion to set aside the order was denied on October 20th.
On October 16th plaintiff secured another writ of garnishment before judgment against the Chrysler Corporation, which was properly served. Chrysler filed a disclosure on November 4th, denying liability and claiming no indebtedness to Lee. Special interrogatories were filed by plaintiff on November 10th and 15th, to which answers were made on November 19th, and plaintiff, on November 22d, filed a demand for trial of the statutory issue against Chrysler. In January of 1938 a motion and an amended motion to dismiss were filed by Lee, who appeared specially, and, on January 20th, plaintiff filed another affidavit for writ of garnishment before judgment against Chrysler. The disclosure filed February 9th says that, at the time of service of this last writ, Chrysler Corporation was indebted to Lee for royalties in the sum of $312.68. On April 25th, Lee again appeared specially and moved to dismiss the garnishment proceedings pending against Chrysler Corporation and, in particular, to release Chrysler from any liability resulting from the mutual dealings between Lee and Chrysler in relation to the so-called Chrysler Management Trust, and to quash the service of the writ issued on January 20th, and the writ itself.
The several motions assert that the successive garnishments were brought for the purpose of harassing and embarrassing Lee, with full knowledge of the fact that any claim which he might have had against Chrysler was neither due nor payable at the time of the writ, that a previous order had released the fund as not being subject to garnishment, and that the garnishments were for the purpose of circumventing any decision which might be entered by the circuit court upon a motion to dismiss the writ issued on October 16th. It was also claimed that the “institution of the garnishment proceedings” constituted an abuse of process. Unreasonable delay and other arguments were advanced in support of the claim of abuse of process. The trial court filed a written opinion in which it was pointed out that, following the entry of the order on September 25, 1937, granting the motion to release the trust certificate on the ground that it was not subject to garnishment, the Manufacturers bank still retained possession of the instrument until 20 days after the denial of a petition for rehearing. The court was of the opinion that the question of lack of jurisdiction over the subject-matter, viz., the interest of Lee in the Chrysler Management Trust, might properly be raised by motion, citing Court Rule No. 18 (1933), 3 Comp. Laws 1929, § 14858, as amended by Act No. 182, Pub. Acts 1937 (Stat. Ann. 1938 Cum. Supp. § 27.1856), and a number of authorities. The court discussed at length the provisions of the Chrysler Management Trust indenture and held that the interest of the defendant in the Chrysler Management Trust was an interest in a common-law trust which could not be the subject of garnishment process; that among these provisions it was pro. vided that the beneficiary must, within one year after the termination of his employment, transfer his certificate to the Chrysler Corporation and that “upon such surrender and transfer and assignment, the corporation will pay, ’ ’ et cetera. Lee terminated his employment with the Chrysler Corporation on July 1, 1937, and the court held that, at the time of the service of the writ issued on October 16,1937, the certificate had not been transferred or assigned and defendant Lee could not have at that time maintained any action against the garnishee defendant, and, therefore, “plaintiff’s writ of garnishment was unavailing." The court quoted from Blake v. Hubbard, 45 Mich. 1, on the subject of improper delay in garnishment proceedings on the part of plaintiff and held that there had been an unexplained delay of at least nine months, and that plaintiff, “through successive steps and writs has tied up the property of the defendant and then without prosecution of those proceedings, has taken fresh steps to continue the process.” The court said that to sanction the procedure of plaintiff would be to encourage the oppressive use of a harsh remedy and, under the rules laid down in Erb-Kidder Co. v. Levy, 262 Mich. 62, and Tsingos v. Michigan Packing Co., 272 Mich. 7, there was an abuse of the court’s process.
The facts presented by this appeal do not justify the conclusion that there was either an unreasonable or unexplained delay on the part of plaintiff. The actual interval between the commencement of the principal case or the issuance of the writ of garnishment and the framing of the issue on either action is not necessarily controlling. A charge of delay must always be considered in the light of the circumstances of the case. What may be too long under one set of facts may not be of sufficient length under another.
In Kiely v. Bertrand, 67 Mich. 332, 333, the court said:
“The act contemplates a speedy determination of the garnishee’s liability, and any considerable delay by plaintiff, not consented to or acquiesced in by the garnishee, will be cause for a dismissal of the proceedings against him. Blake v. Hubbard, 45 Mich. 1.”
A notice from either party would have placed the principal case upon the trial docket after it was fully at issue. Sayre v. Railway Co., 199 Mich. 414, 421, 3 Comp. Laws 1929, § 14257 (Stat. Ann. § 27.986), and part 1, rule 3 of the Third Judicial Circuit.
Lee’s answer was filed on February 13th, when plaintiff was still attempting service on other defendants, and it is admitted that, after May of 1937, the cause could have been dismissed as to those parties against whom an alias summons had been issued and returned unserved. Plaintiff argues in its brief that a Federal injunction had affected the situation, but we cannot consider this as that matter does not appear in this record. Defendant, notwithstanding the statutory provision for the filing of a bond to release garnishment (3 Comp. Laws 1929, § 14900 [Stat. Ann. §27.1898], and Tsingos v. Michigan Packing Co., supra), could have sought an early hearing under part 1, rule 4 of the Third Judicial Circuit. Lee neither prgeciped the principal case for trial nor sought an early hearing and, therefore, he acquiesced in the delay.
Although courts have supervisory control over the use of process and the power, either on application or on their own motion, to prevent abuse thereof, Tsingos v. Michigan Packing Co., supra, we do not agree with the trial judge that the issuance of successive writs in the instant case was “the oppressive use of a harsh remedy,” and, therefore, an abuse of process. In the Erb-Kidder Case, supra, the issuance of successive writs was held to be an abuse of legal process because they were without justification in that plaintiff had tied up money under void writs and, without prosecution of such writs, attempted to tie up more money. The situation in the instant case is different. Disclosure by the Manufacturers National Bank of Detroit, in response to the first writ of garnishment, indicated that there was a possibility that money was due Lee from the Chrysler Corporation, which was also named as a defendant in this writ. The writ failed as against • Chrysler because of faulty service and there was no impropriety in the issuance of another against Chrysler. Plaintiff accepted, without appeal, the determination of the judge, who found that Lee’s interest in the Chrysler Management Trust, as represented by the certificate held by the bank, was not subject to garnishment. The order entered as a result of this determination only affected the garnishment then pending against the Manufacturers National Bank of Detroit and did not determine the liability of Chrysler Corporation, because no garnishment was in effect against it at this time, nor was it included within the terms of the order.
Plaintiff claims that he learned, during the pend-ency of defendant Lee’s motion to dismiss, that Lee’s employment by Chrysler terminated on June 15, 1937, and gives that circumstance as his reason for not appealing from the order dismissing the bank garnishment. It is plaintiff’s theory that the Chrysler indebtedness thereafter became garnish-able and a writ properly lay against Chrysler rather than the bank.
When plaintiff filed such a writ against Chrysler he was met with a disclosure of no indebtedness and, as permitted by statute (3 Comp. Laws 1929, §14859 [Stat. Ann. §27.1857]), submitted special interrogatories, which were answered by Chrysler and upon which plaintiff demanded a trial of the statutory issue. 3 Comp. Laws 1929, § 14868 [Stat. Ann. §27.1866]). Plaintiff, because of Chrysler’s disclosure of no indebtedness and its answers to the interrogatories, was confronted with the possibility of an eventual determination that there was no indebtedness due Lee by Chrysler at the time of the service of the second writ. Plaintiff then secured another writ of garnishment against Chrysler on January 20, 1938, which resulted in a disclosure of a money indebtedness.
The garnishment matter was then at issue and the time of its trial was controlled by 3 Comp. Laws 1929, § 14868 (Stat. Ann. § 27.1866). Plaintiff was entitled to a determination of the question raised by the interrogatories and answer and his demand for trial of the statutory issue on the second garnishment in accordance with the provisions of 3 Comp. Laws 1929, § 14867, as amended by Act No. 182, Pub. Acts .1937, § 14868 (Stat. Ann. 1938 Cum. Supp. §27.1865, Stat. Ann. §27.1866). The essence of this question was whether or not the property in the hands of the Chrysler Corporation was subject to garnishment. The trial court, in considering Lee’s motion to dismiss, said that the indebtedness, if any, arose out of a common-law trust and, therefore, was not subject to garnishment. That determination should have been made upon the kind of trial provided in 3 Comp. Laws 1929, § 14867, as amended by Act No. 182, Pub. Acts 1937 (Stat. Ann. 1938 Cum. Supp. § 27.1865). Plaintiff was not bound to make out a ease before the trial, which the statute permitted, especially when there were disputed questions. The steps taken by plaintiff were neither illogical nor improper and, under the circumstances, there was no abuse of process.
It is also claimed that the order of dismissal was correct because of the court’s lack of jurisdiction over the subject-matter of the garnishment.
“Jurisdiction over the subject-matter is the right of the court to exercise judicial power over that class of cases: not the particular case before it, but rather the abstract power to try a case of the kind or character of the one pending; and not whether the particular case is one that presents a cause of action, or under the particular facts is triable before the court in which it is pending, because of some inherent facts which exist and may be developed during the trial.” Richardson v. Ruddy, 15 Idaho, 488, 494, 495 (98 Pac. 842).
See, also, Hunt v. Hunt, 72 N. Y. 217 (28 Am. Rep. 129).
The circuit court had jurisdiction over that class of cases of which this suit is a member. It may or may not be shown at the trial that the property in question was subject to garnishment as of the dates of the writs, but plaintiff was entitled to his day in court on this question. A trial of the issues had been asked and the facts disclosed by this record do not justify a summary dismissal of the writ. Recor v. Commercial & Savings Bank of St. Clair, 142 Mich. 479 (5 L. R. A. [N. S.] 472, 7 Ann. Cas. 754); Borderland Coal Sales Co. v. Wayne Circuit Judge, 228 Mich. 198; Brotherton Co. v. Jackson, 231 Mich. 604.
The several orders of the trial court are vacated and the cause remanded for further proceedings. Costs to appellant.
Butzel, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred with Bushnell, J. | [
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Reid, J.
Plaintiff filed a petition for writ of mandamus in the Wayne circuit court against the De troit police department trial board, defendant, to compel a rehearing which had been denied plaintiff. The trial court granted the writ. Defendant board appeals.
Plaintiff was a sergeant in the Detroit police department; in 1940 he was indicted by the so-called Ferguson grand jury, on a charge of conspiracy to obstruct justice, and was tried in 1942 and found not guilty by the verdict of the jury in a trial in which Albert Needham and Joseph McCarty were witnesses. Subsequently and on December 16, 1942, he was tried before the Detroit police department trial board on a charge of conduct pnbecoming an officer.. At the police 'board trial Needham and McCarty testified that they had illegally paid money to Purdie while he was a police officer. On March 30, 1943, as a result of the trial before said board, plaintiff was dismissed from the Detroit, police department.
Plaintiff in his petition for a rehearing filed September 27,1945, claims that the two witnesses Need-ham and McCarty now say that their testimony was a mistake and plaintiff claims that if they were now put on the stand they would give correct testimony as a result of "which the defendant trial board would reverse the former decision of the trial board suspending plaintiff as a member of the department.
It appears from the exhibits attached to the answer and return of defendant board that the board denied a rehearing for the- following reasons:
“1. Because the Supreme Court of the State-of Michigan has heretofore ruled that James Purdie had a( fair and legal trial before the police trial board of the Detroit police department and upheld the order of dismissal.
“2. Because there is nothing contained in the petition' for rehearing to warrant or justify the granting of the petition for rehearing of the case.”
The ruling of this Court above referred to is in the ease of Aller v. Detroit Police Department Trial Board, 309 Mich. 382, decided September 11, 1944, in which we say, p. 384:
“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 Eliner Ryan. * * * 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.”
The name of Purdie, plaintiff in the case at bar, appears at page 388 of the opinion in the Aller Case, -supra, and in that case as to Purdie, our finding was in favor of the defendant trial hoard'as to the fairness of the trial.
It is fairly clear, therefore, that the defendant trial hoard in considering plaintiff’s petition for rehearing in the case at bar had in mind the trial and review of the trial in the Aller Case, supra. It further appears from the answer and return of the defendant board that the defendant hoard had before it the testimony taken before the trial hoard of the department at plaintiff’s trial which began December 16, 1942, and culminated in the order of dismissal of March 30, 1943. Two of the former members of the trial hoard are no longer members of the Detroit police department.
The following further appears in the answer and return of the defendant hoard:
“The record of thé proceedings before the police trial hoard include the sworn testimony given by the said Albert Needham and Joseph McCarty before the Honorable Homer Ferguson, circuit court- judge, sitting' as the examining magistrate, and before the Honorable Earl Pugsley, sitting as the trial judge, and that such testimony would have been sufficient to sustain the findings of the trial board. ’ ’
It is very clear, therefore, that the testimony of said two witnesses Needham and McCarty, given before the examining magistrate and afterward their testimony upon the trial before the circuit judge and jury, was also available to the defendant trial board and considered by them.
A careful examination of as much of the testimony as appear's in the record, of said two witnesses on various occasions on which they have testified, might well lead the defendant trial board to conclude that said two witnesses Needham and McCarty were testifying without reserve when before the examining magistrate and afterwards on the trial in circuit court, but that their testimony before the trial board indicated that in the meantime they had become willing to' forget their former testimony, in other words, had become unwilling witnesses. .There was sufficient showing before the defendant trial board to be the basis for a conclusion upon its part that it is unimportant now to discover how far the same two witnesses would be willing to vary from their testimony heretofore given and thus afford plaintiff a specious argument for more favorable consideration. There is no affidavit in the record of either Needham or McCarty that their testimony was perjured or false.
As we said in the Aller Case, supra, p. 389 of the opinion: ,
“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.”
' Taking’ into consideration all the evidence which the defendant trial hoard had in its possession or to which it had access, there was sufficient foundation for its ■ determination not to grant a rehearing’ to plaintiff. There was testimony that plaintiff had accepted bribes.
Our decision in the Állér Case, supra, determined that competent evidence had been presented against Purdie to support his dismissal, notwithstanding his acquittal by the jury in circuit court.'
It is not in our province in this decision to undertake to condemn or exculpate plaintiff Purdie. Our sole duty is to discover whether the defendant trial board had sufficient foundation for its determination. The trial board shows a valid reason for its action. ' Such action therefore must be affirmed.
“We must not usurp the functions of an administrative body.” Goodfellow v. Detroit Civil Service Comm., 312. Mich. 226, 232.
The foregoing principle is applicable to the case at bar. Even though the defendant trial board was acting in a quasi-judicial capacity, it was still part of an administrative department.
What we said in Mapley v. City of Pontiac, 288 Mich. 396, 400, respecting the action of a similar trial board of Pontiac, applies to the action of the trial board in the case at bar:
“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 máde 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 fact by the board is final if supported by evidence.”
In view of our decision, other questions raised do not require discussion.
The order of the trial court appealed from granting the writ of mandamus is reversed. The cause is remanded to the circuit court with instructions to render a judgment dismissing the plaintiff’s petition. No costs are allowed, a matter of public interest being involved. -
/Carr, C. J., and Butzel, Bushnell,' Sharpe, Boyles, North, and Dethmers, JJ., concurred. | [
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Sharpe, J.
In August, 1932, the Detroit Fidelity & Surety Company, a Michigan corporation, the Constitution Indemnity Company of Philadelphia, a Pennsylvania corporation, and Lloyds Casualty Company, a New York corporation, entered into an agreement of merger and consolidation forming Lloyds Insurance Company of America, a New York corporation. All of the assets of the three constituent corporations were transferred to the resulting corporation; the stockholders of the old corporations exchanged their stock for stock in the new corporation and the new corporation assumed all the liabilities and obligations of the three original corporations.
Prior to the mentioned merger, the Detroit Fidelity & Surety Company had underwritten two fidelity bonds for the American State Bank of Detroit against loss occasioned by tbe dishonest acts of its employees. Defalcations were discovered and the First Wayne National Bank of Detroit as successor to the American State Bank of Detroit commenced suit in Wayne county on the bonds. In July, 1932, the suit was removed to the Federal court at Detroit. In October, 1932, the name of the First Wayne National Bank of Detroit was changed to First National Bank-Detroit and in May, 1933, C. O. Thomas was appointed as its receiver.
In August, 1933, Charles E. Gauss, commissioner of insurance of Michigan, filed a bill of complaint in the circuit court of Ingham county asking that a receiver be appointed for Lloyds Insurance Company of America due to its insolvency; and that the receiver take possession of and collect all assets of Lloyds Insurance Company within the State of Michigan. Following this action on the part of the Michigan insurance commissioner and on August 16, 1933, an order was entered by the circuit judge of Ingham county granting the relief asked for in the bill of complaint. On the same day, August 16,1933, that the Michigan receiver was appointed, an order of liquidation was entered in the supreme court of New York declaring Lloyds Insurance Company of America to be insolvent. The superintendent of insurance of New York was appointed liquidator of the domestic corporation and February 16,1934, was set as the final date for all creditors to file their claims. In October, 1933, the Michigan receiver filed a petition in the circuit court of Ingham county praying for authority to enter into an agreement with the superintendent of insurance of New York whereby the Michigan assets of Lloyds Insurance Company would be transferred to the New York department of insurance. The proposed agreement pro vided for the filing of claims with either the Michigan or New York receiver on or before February 16, 1934. When this petition came on for hearing before the trial judge, it was denied.
On December 14, 1934, the Federal court entered judgment for the sum of $250,000 in favor of the First National Bank-Detroit and on the same day B. C. Schram as receiver of the First National Bank-Detroit filed proof of claim in the Michigan Lloyds receivership proceedings. This claim was allowed by the trial judge.
On October 20, 1934, an order was entered which provided that all persons having claims against Lloyds must file proof of their claims with the Michigan receiver on or before December 15, 1934. On January 30,1935, the superintendent of insurance of New York filed a petition to intervene in the Michigan proceedings. This petition was granted on February 5,1935. In November, 1937, the Michigan receiver filed a petition in the Ingham circuit court praying for authority to enter into an agreement with the New York liquidator, the purpose of which was to transfer the Michigan assets of Lloyds in receivership to the New York department of insurance.
The appellant, receiver for the First National Bank-Detroit, entered his appearance in opposition to the granting of this petition. When the cause came on for hearing, it developed that the total income of the Michigan receiver was the sum of $91,407.58 and the total expenditures were $48,320.27; that the principal asset of the Michigan receiver is the home office building, carried on the books of the company at a valuation of $375,000; a real estate mortgage in the sum of $22,000; $10,000 city of Birmingham bonds; a trust certificate in the sum of $998.42; and a bank balance as of November 1, 1937, of $43,087.31. It was also developed that a three per cent, dividend was paid by the New York department of insurance to policyholders who filed claims in the New York proceedings; that six reports had been filed in the New York courts by the New York department of insurance, but no testimony was given as to the value of the Lloyds assets under the New York liquidator’s control or any facts concerning any phase of the New York liquidation. At this hearing, appellant made a motion to dismiss the petition to transfer the Michigan assets to the New York liquidator until such time as definite facts could be produced by the Michigan receiver and the New York liquidator. This motion was denied and on March 9, 1938, an order was entered authorizing the Michigan receiver to enter into an agreement with the New York department of insurance to transfer the Michigan assets of Lloyds to the New York department of insurance, a copy of said agreement being as follows:
“Agreement made and entered into this........ day of ........., 1938 between Horace B. Corell, receiver of the assets and property of the Lloyds Insurance Company of America, Inc., located within the State of Michigan, hereinafter referred to as ‘receiver,’ and Louis H. Pink, superintendent of insurance of the State of New York, as liquidator of Lloyds Insurance Company of America, Inc., by Milton O. Loysen, duly appointed special deputy superintendent of insurance in charge of the liquidation of said company, hereinafter referred to as ‘liquidator;’
“Whereas, by an order of the supreme court of the State of New York, entered in the office of the clerk of the county of New York, on the 16th day of August, 1933, the Lloyds Insurance Company of America, Inc., a New York insurance corporation, was declared insolvent and its charter was dissolved, and the liquidator directed to take possession of its property and to liquidate its affairs pursuant to article 11 of the insurance law of the State of New York; and
“Whereas, by an order dated August 16, 1933 of the circuit court of the State of Michigan, in and for the county of Ingham, Horace B. Corell was appointed receiver of Lloyds Insurance Company of America, Inc., and directed to take possession of all the property and assets of said company located within the State of Michigan; and
“Whereas on the 9th day of March, 1938, an order was duly made and entered in the circuit court of the State of Michigan, in and for the county of Ingham, authorizing and empowering the said Horace B. Corell, receiver, to enter into an agreement with the liquidator for the transmission of the Michigan assets by the receiver to the liquidator in return for which the liquidator will recognize claims filed in the Michigan court and give them the same force and effect as claims properly filed and allowed in the New York liquidation proceedings.
“Now, therefore, in consideration of the mutual promises herein contained, the parties hereto respectively agree as follows-:
“1. The receiver will immediately, after deducting the administration expenses of the Michigan proceeding as determined by the court in charge of that proceeding, remit, assign and transfer to the liquidator all assets of Lloyds Insurance Company of America, Inc., which now are, or which hereafter may come, within his possession or control, saving and excepting the sum of $3,000, which the receiver shall retain in his possession until administration of the estate has been completed in the State of Michigan, out of which sum the receiver shall pay such administration expenses as have accrued or may ac erne pursuant to the order of the circuit court for the county of Ingham and State of Michigan.
“2. The liquidator will accept the final determination and allowance which has been, or will be made, by the receiver and the Michigan court in charge of the Michigan proceeding on the claims set forth in the schedule hereto annexed, made a part hereof and marked Exhibit ‘A’ (not exceeding the amounts therein set forth); and will make dividend distribution to said claimants on the basis of the amounts allowed by the Michigan receiver and approved by the Michigan court, along with and like all other allowed claims of the same class in the New York liquidation proceedings; provided, however, that if any Michigan claimant has filed his claim both in the Michigan proceedings and in the New York liquidation proceeding, upon which a dividend has been paid by the New York liquidator, such claimant shall not be entitled to a further dividend by the liquidator, until and unless all other claimants or creditors of the same class have received a dividend equal in amount to the dividend which such claimant has already received.
“3. All expenses, fees, disbursements and debts incurred in the administration of the Michigan receivership are to be payable only out of the Michigan assets, and no claim for any part of such expenses, fees, disbursements and debts may be asserted against the liquidator or against the assets of Lloyds Insurance Company of America, Inc., in New York.
“4. The liquidator will immediately after the execution of this agreement by the parties hereto, apply to the Supreme Court of the State of New York, in and for the county of New York, for an order approving same; and this agreement shall not become effective until and unless such an order is made. ’ ’
Claimant appeals and contends that where the stock of a new corporation is the sole consideration received for the old company’s assets, the assets transferred to the new corporation are impressed with a trust for the benefit of the creditors of the old corporation; and that assuming that the Michigan receivership is ancillary to the New York receivership it was an abuse of judicial discretion on the part of the trial court to order the transfer of the local assets of Lloyds to the New York receivership where there was no showing of the status of the primary or ancillary trust, or no showing that the transfer would be beneficial, or at least not detrimental to the Michigan creditors of Lloyds.
Prior to the hearing of this cause in the Supreme Court, a motion was made to dismiss appellant’s appeal upon the theory that such appeal was from an interlocutory order entered by the trial judge and contrary to Court Rule No. 60 (1933).
Appeal from a chancery decree or order is a statutory right, 3 Comp. Laws 1929, § 15508 (Stat. Ann. § 27.2608); an appeal of right is proper only from a final judgment or order, In re Widening Woodward Avenue, 265 Mich. 87; the right to appeal is determined not by the form of the order or decree, but by its effect, Perrin v. Lepper, 72 Mich. 454. In Equitable Twist Co. v. Bankers Trust Co., 268 Mich. 394, we held that if the order might finally dispose of a portion of the subject matter in controversy, it is a final order and leave to appeal need not be obtained.
The order appealed from relates in part as follows :
“It is further ordered that the receiver herein be and he hereby is authorized to do any and all necessary acts to accomplish the intents and purposes of said agreement without the further order of this court. ’ ’
The effect of the order complained of is to transfer the assets to the jurisdiction of the courts of the State of New York and conclusively determines the rights of Michigan creditors to relief out of the assets in the courts of Michigan. The order appealed from was final as to certain rights of Michigan creditors and leave to appeal was unnecessary.
It is the claim of appellee that it is the duty of an ancillary receiver to transmit assets to the receiver acting in the domicile of a foreign corporation; and that it is the duty of the Michigan receiver to assist the New York liquidator who is the only proper person to dissolve the defendant company.
In the case at bar a judgment in the sum of $250,000 was secured against the Detroit Fidelity & Surety Company upon its bonds. The claim upon which this judgment arose occurred before the agreement of consolidation was perfected. Under these facts, the claimant was a creditor of the Detroit company prior to the consolidation. It is a general rule in Michigan that where a corporation transfers all of its assets to another corporation, the purchaser of those assets receives them subject to the right of creditors of the transferring corporation.
In Grenell v. Detroit Gas Co., 112 Mich. 70, we said:
“Under such circumstances, we think a legitimate inference is that the purchase was made subject to the application of so much of the property as might be necessary to the payment of the debts of the Michigan Gas Company, if not with the understanding that all debts should be paid by the purchaser. Berry v. Railroad Co., 52 Kan. 774 (36 Pac. 724, 39 Am. St. Rep. 381). Again, a corporation cannot sell all of its property, and take in payment stock in a new corporation, under an arrangement that has the effect of distributing the assets of the vendor among its stockholders, to the exclusion and prejudice of its creditors; and a company making such purchase, in consideration of an issue of its own stock to such stockholders, takes the property subject to the rights of creditors. Such an arrangement is a diversion of the trust fund.
“It is said that there is nothing to show an intention to defeat the creditors of the Michigan Gas Company, as this was not a liquidated claim at the time this transfer was made. See Schaible v. Ardner, 98 Mich. 70. Under the arrangement, the promoters and stockholders of the Detroit Gas Company knew that it was getting all of the property of the Michigan Gas Company, without provision for its debts, if there were any. It was bound to know that this property was charged with such debts, and ought not to be distributed among the stockholders to the exclusion of creditors. It was a party, then, to a diversion of the trust fund, and, having in its possession such fund, holds it subject to the payment of debts. It cannot be called a bona fide purchaser of the property, as against existing creditors.”
Under the authority of the Grenell Case, supra, the transfer of the assets of the Detroit company to Lloyds Insurance Company was made subject to the rights of the creditors of the Detroit company and under the authority of Fisk v. State Savings Bank of Ann Arbor, 225 Mich. 580, the new corporation held the assets subject to debts and as trustee for creditors.
Appellant claims that the record fails to show sufficient facts from which the court can be assured that if the assets are transferred to the New York liquidator, the Michigan creditors will receive the protection they are entitled to. It is to be noted that the New York liquidator promises to make equal dis tribution of dividends to the Michigan creditors with all creditors of the same class.
An examination of the record fails to show the value of the assets in the hands of the New York liquidator nor does it show the value of the assets in the hands of the Michigan receiver. The record speaks of an office building in the city of Detroit with a book value of $375,000, but this building is subject to a real estate mortgage, the amount of which is not stated. In Commissioner of Insurance v. National Life Ins. Co. of United States of America, 280 Mich. 344, we held that a receiver appointed in a foreign State had no extraterritorial jurisdiction; and that a trial judge may impose conditions upon a foreign receiver when Michigan assets are transferred to him. In the case at bar, the trial judge failed to impose conditions upon the New York liquidator that would preserve the rights of the receiver of the First National Bank-Detroit against the Detroit Fidelity & Surety Company in the manner hereinbefore mentioned. The record is insufficient to make such a determination. It was an abuse of judicial discretion to order the transfer of Michigan assets to the New York liquidator without first having ascertained that the Michigan creditors would receive adequate protection in the foreign jurisdiction.
The decree of the trial court is reversed and the cause referred to the trial court for further proceedings in harmony with this opinion. Appellant may recover costs.
Wiest, Bushnell, Potter, Chandler, and North, JJ., concurred with Sharpe, J. | [
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Wiest, C. J.
July 17, 1935, on a highway near Somerset Center, in this State, there was.a head-on collision between plaintiff’s truck and an automobile operated by Mr. C. C. Griswold, a resident of the State of Iowa. For damages to the truck plaintiff brought this suit against defendant Howard A. Youngblood on the alleged ground that he was the owner of the automobile. Mr. Youngblood, who was riding in the automobile and was seriously injured, in answering the declaration included a cross-action against plaintiff to recover damages for such injuries.
The issues, involving ownership of the automobile and negligence occasioning the collision, came to trial before the court without a jury and plaintiff had judgment. Defendant appeals and contends that the automobile was owned by Mr. Griswold who was operating it and, at the time of the collision, he was asleep on the back seat and, inasmuch as plaintiff’s truck was on the wrong side of the road at the time of the collision, the accident was caused by plaintiff’s negligence.
To this last claim plaintiff replied that the automobile approached the truck on the wrong side of the road and so continued until it was necessary for the driver of the truck to turn to the other side of the road and, because the automobile also turned to that side, the collision followed.
In awarding plaintiff judgment the trial judge found the truck driver free from negligence, and the appeal by defendant does not bring such holding to review.
The question then is whether the trial judge was in error in holding* defendant the owner of the automobile.
Mr. Griswold was killed. Defendant was a dealer in new and used cars in the State of Iowa and brought about the purchase of a Chrysler car by Mr. Griswold, who was also a resident of that State, with delivery of the car to be made at the Chrysler Sales Corporation in the city of Detroit. Upon receiving notice that the car with special attachments would be ready for delivery on a specified day Mr. Griswold and Mr. Youngblood came to Detroit and, at the Chrysler Sales Corporation, Mr. Griswold complied with the form of his identity required of a purchaser, the company issued an “In transit certificate,” which was also signed by Mr. Griswold, as well as the release of sales order, and then the car was delivered to Mr. Griswold. At the same time Mr. Youngblood gave Mr. Griswold a certificate, under oath, of delivery of the car to him. Thereupon the driveaway plates, issued in Iowa to Mr. Youngblood as a dealer in cars, were attached to the car and the start for Iowa commenced. Mr. Youngblood drove the car for some distance and then Mr. Griswold took the wheel, and was driving at the time of the collision.
The trial judge, after stating: “The question of who had title to the Chrysler is in dispute,” held “And under the law I find title thereto to rest in defendant. Endres v. Mara-Rickenbacker Company, 243 Mich. 5.”
The instant case is wholly outside the setting upon which the law was applied in that case. In the case at bar the car, before sale by the manufacturer, was not required to be registered; the purchaser, a nonresident of the State, could not obtain from the vendor a certificate of registration nor could he, under the circumstances here disclosed, register the car. The statutory provision involved in the En-tires Case relates to sales of registered cars, and its purpose is to maintain a true public record of title to cars licensed by the State.
The court was in error in holding defendant owner of the car and, therefore, liable to respond in damages.
No appeal having been taken by defendant from the adverse judgment on his cross-action, the judgment appealed from is reversed without a new trial, and with costs to defendant.
Butzel, Bushnell, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred. | [
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Wiest, J.
An information in the recorder’s court for the city of Detroit charged defendant with murder in the first degree. Upon arraignment he entered a plea of not guilty. Thereupon the prosecuting attorney petitioned the court to appoint a commission of inquiry as to defendant’s sanity. The court appointed four doctors who examined defendant and made report that he was insane and, therefore, incapable of taking any part in a trial. Upon such report the court held a hearing at which defendant and his counsel were present. At that hearing the doctors were sworn and gave testimony clearly showing defendant to be insane and the court so found and committed him to the State hospital at Ionia. Appeal is prosecuted in behalf of defendant.
The proceeding was • under the provisions of 3 Comp. Laws 1929, § 17241, as amended by Act No. 317, Pub. Acts 1931 (Comp. Laws Supp. 1935, § 17241, Stat. [Ann. § 28.967). That statute provides :
“When a person accused of any felony shall appear to be insane * * * the court, being certified * * * of the fact, shall carefully inquire and' ascertain the issue of insanity. The court shall fix the time and place for the hearing of said issue. * * * The court shall call two or more reputable physicians and other credible witnesses to testify at said hearing, and the prosecuting attorney to aid in the examination and if it be deemed necessary to call a jury for that purpose, is fully empowered to compel the attendance of witnesses and jurors. Such alleged insane person may be represented by counsel who may appear and take part in the proceedings, cross-examine the witnesses and produce witnesses and testimony for and on behalf of such person. If it is claimed that such person became insane after the commission of the felony with which he is is charged and before * * * trial thereon, the test on the trial of such issue shall be whether such person is capable of understanding the nature and object of the proceedings against him and of comprehending his own condition in reference to such proceedings and of assisting in his defense in a rational or reasonable manner.”
Counsel for defendant contend the court was in error in refusing their request for a jury, and the statute leaving it optional with the court to call a jury is unconstitutional in that it deprived defendant of the right of trial by jury.
The sanity proceeding, under the statute, is an inquiry in the nature of an inquest, humanely provided for safeguarding the rights of an accused mentally incapable of advising with counsel and conducting the defense accorded one charged with having committed a felony. It is not a trial, placing a defendant in jeopardy, but a collateral inquiry to preserve Mm from the jeopardy of a trial wMle insane.
Denial of a jury did not deprive defendant of any rigM.
In Nobles v. Georgia, 168 U. S. 398, 401, 409 (18 Sup. Ct. 87), it was claimed in behalf of a convicted person, under sentence of death and alleged to be insane, that inquisition thereon must be tried by jury. We quote from the claim:
“ ‘ Petitioner further says that by the settled principles of the common law the ascertainment of the fact of sanity or insanity at any stage of the proceedings in the course of a legal investigation was a function of the trial court; that is, of the court having jurisdiction of the crime itself and of the criminal, whether before or after arraignment, before or after conviction, or after conviction and before execution, or before or after judgment, and that the settled and orderly course of procedure was the summoning of a jury and a trial of this issue under the forms of law, by introduction of evidence under the rulings of the judge of the said court, and whose duty it was to instruct the jury upon the law of the issues involved and to aid them in making a verdict.’ ”
The court, after a review of authorities relative to such an inquest at common law, stated:
“It being demonstrated by reason and authority that at common law a suggestion made after verdict and sentence of insanity did not give rise to an absolute right on the part of a convict to have such issue tried before the court and to a jury, but addressed itself to the discretion of the judge, it follows that the manner in which such question should be determined was purely a matter of legislative regulation. It was, therefore, a subject within the control of the State of Georgia. Because we have confined onr opinion exclusively to the question before us, that is, the right arising on a suggestion of insanity after sentence, we must not be understood as implying that a different rule would prevail after verdict and up to and including sentence, or as passing upon the question whether, under the Fourteenth Amendment, a State is without power to relegate the decision of a question of insanity, when raised before conviction, to such apt and special tribunal as the law might deem best. ’ ’
The enactment is properly a part of criminal procedure, placing venue of the inquiry in the very court where the accused awaits trial. Its salutary provisions may be invoked by the prosecution or in behalf of the accused, and the statute saving an insane person from being tried for a felony while under such a disability preserves, instead of deprives him of due course of law.
At the hearing the doctors testified that they examined defendant and the report, signed by them, stated their findings and, over objection, the court admitted the report in evidence. Counsel for defendant cross-examined the doctors, and there was. no reversible error in this instance.
We find no error. Affirmed.
Butzel, C. J., and Btjshnell, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred. | [
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McAllister, J.
On May 30, 1935, plaintiff, a girl 10 years old, suffered injuries while riding in an automobile owned and driven by her cousin, John Bernadich, the above named defendant. The accident occurred near Elderton, in the State of Pennsylvania. Defendant Bernadich ran off the pavement, into a culvert and the automobile overturned. After the accident plaintiff’s father and two boys came to Elderton and had a conversation with defendant re garding the cause of the accident. Defendant states that he was afraid of what the father of plaintiff would do to him if he told the truth about the accident. He states that he, therefore, told plaintiff’s father that another car had forced him off the road and that he was entirely blameless for the occurrence of the accident.
Defendant had a policy of liability insurance with the Lincoln Mutual Casualty Company, above named garnishee defendant, in which the company agreed to indemnify and insure him against loss from liability arising out of a judgment against him for damages because of bodily injuries suffered by any person other than an employee of the insured, as the result of an automobile accident.
A few days after the accident, defendant furnished the insurance company with a statement from which it appeared that the responsibility therefor was due solely to the negligence of the operator of another automobile coming from the opposite direction and on the wrong side of the road. Approximately four months after the accident, plaintiff brought her suit against defendant. Before defendant’s answer was filed and five days after the commencement of the suit, defendant gave another statement to the insurance company repeating in detail his previous version together with a drawing detailing the course that the alleged oncoming car followed in crossing the center of the highway and driving on the wrong side of the road, together with an indication of the course that the insured took in driving off the highway in order to avoid the collision. Defendant’s answer was filed by the attorneys for the insurance company setting up as a defense the version as outlined by defendant in two statements submitted to the insurance company by him. On November 2, 1936, approximately 18 months after the accident, defendant gave another statement to the insurance company in which he again repeated that no accident would have happened if the oncoming car had remained on its proper side of the highway. None of defendant’s three statements indicated any fault on his part.
On December 1, 1936, when the case was on call and about to be reached for trial, defendant sent by registered mail a letter to the insurance company stating that he did not know how the accident happened and could not swear that there was an approaching car. This was the first notification that the company had that no other car was involved and the first statement made to the insurance company indicating that defendant was in any way to blame. After receiving this letter, the company sent for defendant who appeared at its office and signed a statement setting forth that there was no other car at or near the scene of the accident and no other car was involved in any way. The day after receiving this statement the company denied liability to defendant because of his failure to aid in securing evidence and because of his falsification of reports which, it was claimed, constituted an attempt to defraud the insurance company. About two weeks later the case was reached for trial and defendant testified therein that there was no oncoming car and that he did not know how the accident happened. Plaintiff had verdict and judgment against defendant, and thereafter instituted proceedings in garnishment against the insurance company. On the trial of the issue before a jury, defendant joined in the statutory proceeding. He testified on the trial. The jury, in answer to a special question submitted by the court, found that defendant did not attempt to perpetrate a fraud upon the insurance company. Plaintiff had a • verdict upon which judgment was entered, and from which defendant insurance company appeals.
The errors assigned embody the claim that the court erred in entering a judgment because of the fact that defendant was guilty of fraud which resulted in voiding the policy; that the participation in the garnishment trial by the defendant constituted reversible error; and that prejudicial error resulted when the trial court refused to strike out alleged hearsay testimony.
The insurance contract between defendant and the company provides:
“This policy contract shall be void * * * if the assured or his agent shall attempt to defraud the company either before or after any loss occurs.”
A motion for judgment notwithstanding verdict was made by the insurance company; the trial court denied such motion on the ground that defendant was not guilty of any fraud in making the various statements to the insurance company, and that no damage or prejudice to the company resulted therefrom.
An automobile insurance policy is to be construed in favor of the insured to effect the result, and exceptions to the general liability provided are to be strictly construed against the insurer. Pawlicki v. Hollenbeck, 250 Mich. 38. See, also, Kangas v. New York Life Ins. Co., 223 Mich. 238.
In Waldbauer v. Hoosier Casualty Co., 285 Mich. 405, it was said:
“The doctrine is well established that fraud will not be presumed but must be proved. Robert v. Morrin’s Estate, 27 Mich. 306. * * *
‘ ‘ The burden of proof, therefore, rests upon plaintiff to show actionable fraud, the elements of which have been stated in Candler v. Heigho, 208 Mich. 115:
" 'It is well stated in 20 Cye. p. 13:
“ ‘ “ The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. Each of these facts must be proved with a reasonable degree of certainty, and all of them must be found to exist; the absence of any one of them is fatal to a recovery.’> > >>
To sustain a defense of fraud because of misrepresentation or false statements in an insurance contract, it must be shown that the insurer was prejudiced or damaged by such conduct. Francis v. London Guarantee & Accident Co., 100 Vt. 425 (138 Atl. 780).
“It is a firmly established rule of construction that policies of insurance will be liberally construed to uphold the contract, and conditions contained in them which create forfeitures will be construed most strongly against the insurer and will never be extended beyond the strict words of the policy. The court will never seek for a construction of a forfeiture clause in a policy which will sustain it, if one which will defeat it is reasonably deducible from the terms and words used to express it. * * * Concededly, the insured did not ‘commit or attempt false swearing.’ Nor was there any proof of a failure to comply with the provisions of the policies requiring the insured to cooperate and assist in defending against the claims presented, and in adjusting and minimizing the loss or damage, and to abstain from fraud. * * * Appellants contend that they suffered detriment and injury by reason of the untruthful version of the occurrence given in the first statement. * * * His version of the occurrence contained in the first statement tended to exculpate him from negligence. It cannot be said that this denotes a failure to cooperate and assist the insurer in making a defense, or a purpose to perpetrate a fraud. Rather the reverse is the case. The insured thereby evinced a willingness and purpose to cooperate with and assist the insurer in resisting the claims for damages asserted by plaintiff. * * * Construing this clause most strongly against the insurer, it merely requires such aid and assistance as the assured may be able to render in effecting an adjustment of the claim covered by the policy, and in minimizing the loss sustained by the insured thereunder. * * * When the first action was instituted, the insurers were given a correct statement of the facts. Admittedly, they had ample time to investigate and prepare for trial, or adjust the claims if that were deemed the preferable course. They suffered no detriment or injury by reason of this alleged breach of the provisions of the contracts. * * * The proofs indisputably show that the insured substantially complied with the stated conditions of the policies, and that, in any event, the delay in advising the insurers of the facts did not result in the substantial impairment of any of their policy rights, or any detriment or injury, and, therefore, will not be permitted to work a forfeiture. ” Rockmiss v. New Jersey Manfrs. Ass’n Fire Ins. Co., 112 N. J. Law, 136 (169 Atl. 663).
“It is not' enough that there is a deviation from the terms of the contract, but it must be a material deviation with a paid surety, and one which results in injury to it in order to release it from liability.” Realty Construction Co. v. Kennedy, 234 Mich. 490, 495.
“It (the surety) is not relieved from its obligations except when it is shown that there is a material departure from the contract which resulted in some injury to the surety.” Grinnell Realty Co. v. General Casualty & Surety Co., 253 Mich. 16.
Whether misrepresentations or false statements void an insurance policy depends upon the intent to defraud and this is a question of fact for the jury. See Alma State Savings Bank v. Springfield Fire & Marine Ins. Co., 268 Mich. 631.
The court properly submitted the special question to the jury on the question of whether defendant, by his statements, attempted to perpetrate a fraud; the jury’s finding that no such attempt was made is conclusive.
The participation of defendant in the garnishment proceeding was not prejudicial error as garnishment is ancillary to the principal suit and defendant is properly a party therein and may participate in the proceedings. See Hiles v. The Selas Co., 219 Mich. 88.
On the trial defendant was asked by counsel:
“Q. Did you talk with Matt about this accident?
“A. Why, he asked me how it happened, I tell him that — .
“Mr. Ricard: Just a minute, please. We think discussions between these people amount to hearsay.”
Thereafter, there ensued a colloquy between the court and counsel, following which defendant testified that he had told plaintiff’s father that another car had pushed him off the road. No objection was made to such questions or answers. Later, plaintiff’s father was asked by her counsel whether he had asked defendant for a statement as to how the accident occurred. Upon objection that such answer would be hearsay, the court allowed the witness to state that defendant had told him not to be angry; that he did not know how it happened; and that all he knew was that the car upset. The admission of such testimony, while perhaps subject to the objection made, was unimportant and did not constitute reversible error.
Many cases are cited by garnishee defendant relating to the voiding of policies because of lack of cooperation. Such cases can be distinguished from the instant case largely because of the fact that there is no similar “cooperation clause” in the policy under consideration. In the instant case the cooperation clause of the policy provides:
. “The assured shall personally appear in court in the trial of any cause brought against the assured, and when requested by the company, shall. aid in effecting settlements, securing evidence, the attendance of witnesses and in prosecuting appeals.”
There is no proof that the assured did not comply with such provision of the policy; and in any event, there was no prejudice or loss to the insurance company shown because of the conduct of defendant.
It is urged that the insurance company was prejudiced in not being able to investigate the accident and had not sufficient opportunity to make settlement rather than to go to trial. The company had two weeks from the time of learning of defendant’s final version of the accident until the time of trial. No attempt was made to secure a continuance by the attorneys before the company proceeded to the trial of the principal case.
The company having failed to show prejudice, loss or damage because of the false statements of defendant, the jury having answered the special question to the effect that the defendant had not attempted to perpetrate any fraud upon the insurer, and no prejudicial error appearing in the conduct of the trial, the verdict is sustained and the judgment is affirmed, with costs to plaintiff.
Wiest, C. J., and Butzel, Bushnell, Sharpe, Potter, Chandler, and North, JJ., concurred. | [
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Chandler, J.
Evelyn Swan died on August 10, 1937. Proponents offered as her last will and testament an instrument dated August 10,1935, the same bearing tbe names of Foley Beattie and Virginia Beattie, his wife, as subscribing witnesses.
The will having been allowed in the probate court, an appeal was taken to the circuit, wherein judgment was entered in favor of proponents. Contestant appeals, contending that a question of fact was presented for the jury as to whether the proffered instrument was properly executed in accordance with the provisions of 3 Comp. Laws 1929, § 13482 (Stat. Ann. §26.1065).
Mr. and Mrs. Beattie, whose names appear as subscribing witnesses, testified that the signatures appearing upon the instrument were their signatures, but that they had subscribed their names thereto in the spring of 1935, and had never witnessed a will for deceased on August 10th of that year. Mrs. Beattie also testified that in the summer of 1935, deceased had stated that she had changed her will and that she (Mrs. Beattie) was not a witness to the new will.
Mr. Kelley, the attorney who prepared the will, testified that on or about August 7, 1935, Mr. Hoey, a friend of deceased, called at his office and stated that deceased desired to make some changes in her will, and that upon Mr. Hoey’s request he prepared the instrument offered by proponents and delivered the same to Mr. Hoey.
Mr. McGuirk, another attorney associated with the same law firm as witness Kelley, testified that early in March, 1935, he prepared a will in accordance with the instructions of the testatrix, which was executed a couple of weeks later by deceased in his office, and that he and his secretary subscribed their names as witnesses thereto. He further testified that in August, 1935, Mr. Hoey called him and stated that Mrs. Swan wanted to make some changes in her will, but due to the fact that he was about to leave the city lie referred Mr. Hoey to Mr. Kelley, who prepared another will as above mentioned.
Mr. Hoey testified that in March, 1935, at Mrs. Swan’s request, he took her to Mr. McGuirk’s office for the purpose of making her will; that thereafter he returned to the law office with Mrs. Swan, at which time she executed the will; that it was witnessed by Mr. McGuirk and his stenographer; that in July, 1935, at Mrs. Swan’s request, he arranged for the preparation of another will which was witnessed in the following month in his presence and in the presence of Mr. and Mrs. Beattie, who subscribed their names thereto as subscribing witnesses.
At the conclusion of all the proofs, both parties moved for a directed verdict. At that time, the trial court believed that a question of fact was presented as to whether the will in question was properly executed in accordance with the statutory provisions because of the testimony of the Beatties, that they witnessed a will in the spring of 1935, whereas the will in question, although bearing their signatures as witnesses, was dated August 10, 1935. The court then announced that he was reserving his decision on the motions under the Empson act (3 Comp. Laws' 1929, § 14531 et seq. [Stat. Ann. § 27.1461 et seq.]), and submitted the question to the jury, who found in favor of the contestant. Thereafter, the court granted proponents’ motion for judgment non obstante veredicto, and this appeal ensued.
It appears to be appellant’s contention that because the Beatties testified positively that they witnessed but one will for deceased in the spring of 1935, and that they witnessed no other will for her, and because the will offered by proponents bore date of August 10, 1935, a question of fact arose as to whether the instrument was duly executed in accord anee with the provisions of onr statute (3 Comp. Laws 1929, §13482 [Stat. Ann. §26.1065]), which requires a will to “be in writing and signed by the testator or by some person in his presence, and by his express direction, and attested and subscribed in the presence of the testator by two or more competent witnesses.”
The statute does not require a will to be dated and in the absence of such a provision a date is not an essential requisite to its validity. 68 C. J. p. 652, § 279; annotation, L. R. A. 1916E, 499; Peace v. Edwards, 170 N. C. 64 (86 S. E. 807, Ann. Cas. 1918A, 778). See, also, Bates’ Estate, 286 Pa. 583 (134 Atl. 513, 48 A. L. R. 294).
Mr. and Mrs. Beattie, according to their undisputed testimony, witnessed a will for decedent in a manner which complied with all the requirements of the statute. They gave positive testimony, which was also undisputed, that the signatures affixed to the proposed will were their signatures, and were equally positive that they witnessed but one will, which was the one offered for probate. Probate of the will should not be defeated either because they were mistaken or had forgotten the exact date of execution, or because the will was erroneously dated, if other necessary requirements were fulfilled. In brief, a dispute solely as to whether a will was in fact executed upon the date mentioned therein creates no issue of fact for the jury as to whether the same was properly executed in accordance with the statute.
Judgment affirmed, with costs to appellee.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, and McAllister, JJ., concurred. North, J., took no part in this decision. | [
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North, J.
Under foreclosure of a mortgage securing the payment of a promissory note executed by Louise Pilkewitz, plaintiff took a deficiency decree in the amount of $1,265 and costs against Mrs. Pilkewitz, nee Manning. Execution was issued and returned nulla bona. Thereupon plaintiff filed this judgment creditor’s bill, making Mrs. Pilkewitz and the New York Life Insurance Company defendants. Both parties appeared and answered; and the defendant New York Life Insurance Company also filed a motion to dismiss the bill of complaint, assigning reasons hereinafter considered. The circuit judge granted this motion. Plaintiff has appealed.
Mrs. Florence Manning, mother of defendant Louise Pilkewitz and now deceased, carried four policies of insurance in the defendant New York Life Insurance Company. The insured entered into agreements with the insurer whereby provision was made for disposition of the proceeds of the respective policies. Upon the death of the insured so-called certificates of trust were issued to the beneficiary in accordance with the terms of the agreements between the insurer and the insured. This litigation concerns only the certificates issued under three of such agreements, the fourth one having been fully satisfied. Each of these three agreements contained the following provision:
‘ ‘ The benefits under said trust shall not be transferable nor subject to commutation or incumbrance, nor except in an action to recover for necessaries shall said company as trustee, or otherwise, pay or be liable to pay any benefits under said trust to any person, firm or corporation except to said beneficiary personally, or to a guardian for said beneficiary during minority.
“This appointment is made and delivered at the home office of said company in the city of New York where said trust is to be performed. All payments thereunder are to be made at said home office. Said trust is to be subject to and governed by the laws of the State of New York and not subject to or governed by the laws of any other place, and especially is to be governed by chapter 327 of the laws of New York, 1911, which amends section 15 of the personal property law of the State of New York, relating to trust funds, by providing that when the proceeds of a life insurance policy becoming a claim by the death of the insured, are left with the insurance company under a trust, the benefits accruing thereunder after the death of the insured, shall not be transferable, nor subject to commutation or incumbrance, nor to legal process except in an action to recover for necessaries. ’ ’
It is conceded that the obligation of which plaintiff seeks satisfaction is not for necessaries. In the opinion which he filed, incident to granting the motion to dismiss, the circuit judge said:
“The court cannot accept plaintiff’s theory that the relationship of the parties to the agreement in issue is that of trustee and cestui que trust. The agreement provides for a commingling of funds and a proportion of return. These provisions are strangers to the fiduciary relation. It is the opinion of the court that there is no trust here, and that the parties stand in the position of debtor and creditor with an express statutory exemption.”
Appellant asserts that the circuit judge, in so holding and ordering dismissal of the bill of complaint, was in error. The record discloses that the insurance company is obligated to pay Mrs. Pilkewitz, under the certificates held by her, $270 per month; and that $140 per month is sufficient to cover her reasonable monthly living expenses. It is appellant’s contention that as to the balance of $130 per month the court should order payment to a receiver to be applied on the decreed indebtedness of Mrs. Pilkewitz to plaintiff. Appellant recognizes it is provided in each of the agreements between the insurance company and the mother of Mrs. Pilkewitz that it shall constitute a contract to be performed in the State of New York and under the laws of that State, and that the benefits accruing to Mrs. Pilkewitz cannot be transferred or assigned or be come subject to execution except for necessities. But appellant contends that sucb provisions are not effective in this State in a suit to which both the insurance company and Mrs. Pilkewitz are parties. Instead, appellant asserts the exemptions to which Mrs. Pilkewitz is entitled are fixed by the law of Michigan. This presents the issue which is decisive of this appeal. If the contract rights created by the agreements entered into between the insurance company and the mother of Mrs. Pilkewitz are governed by the laws of New York, then clearly the circuit judge was right in dismissing plaintiff’s bill of complaint.
It is specifically provided in each of the agreements entered into between the insurer and the insured that the issuing of the certificates now held by Mrs. Pilkewitz discharged the insurer from further liability on account of the policies held by Mrs. Pilkewitz’ mother; and these agreements also provide, relative to the money accruing under the respective policies, that the insurance company “may mingle the sum so received with its general corporate funds as a part thereof.” The agreements further provide that annually the insurance company ‘ ‘ shall credit the fund then remaining in its possession with interest at such rate per annum as said company may declare for that year on funds held in trust under trusts of this kind, but shall guarantee that the rate of interest shall in no year be less than three per cent.” Under similar arrangements it has been held that the relationship created between the insurance company and the recipient of the benefits is that of debtor and creditor. In Crossman Co. v. Rauch, 263 N. Y. 264 (188 N. E. 748), the court said:
“The obligation of the insurance company constitutes a debt from the company to appellant, the beneficiary, under the policy. Although the word trust is used, the agreement is not in fact a trust agreement. The monthly payments which the company contracted to pay are definitely fixed in amount. They are not income on personal property. They constitute deferred payments which the company agreed to make to the beneficiary in consideration of the receipt at the death of insured of $50,000, the face value of the policy. ’ ’
Again, in a similar case, the same court said:
“We are convinced, after a careful examination of the character of the relations existing between these parties, that it cannot be said that the defendant is in any sense a trustee of any particular fund for the plaintiff, or that it acts as to him and in relation to any such fund in a fiduciary capacity. ’ ’ Uhlman v. New York Life Ins. Co., 109 N. Y. 421 (17 N. E. 363, 4 Am. St. Rep. 482).
Under New York law, which is of consequence in this case, the proceeds of the insurance carried by Mrs. Manning and payable to her daughter under the agreements with the insurance company are exempt from execution, except for necessaries, regardless of whether the relationship between the insurance company and Mrs. Pilkewitz is one of trust or one of debtor and creditor. Crossman Co. v. Rauch, supra. While it may be interesting academically, under the New York holding we think it is not of controlling importance for decision of this case whether it be said that the relation between the insurance company and Mrs. Pilkewitz is that of debtor and creditor or one of trust. The fundamental fact is that their respective rights and obligations to each other arise from contract; and that the created contractual relations are valid in the State of their origin, where by its terms the contract is to be executed. And it may also be noted that the contract does not offend against the public policy of this State where suit is brought.
Appellant strenuously insists that Mrs. Pilkewitz’ right to an exemption is controlled by the law of this State, which is not only her place of domicile but also the forum of the suit. We quote from his brief:
“The plaintiff in this case relying upon the case of Spring v. Randall, 107 Mich. 103, claims a right to have the chancery court determine how much the defendant in this case requires for her fair support, and to make an order or decree requiring the trustee to pay over to the receiver appointed by the court, the monthly surplus of the moneys which would otherwise be payable to the defendant under the trust created by her mother. * * *
“The circuit judge, however, sought to apply a statutory exemption applicable only to proceedings at law and legal process in the State of New York. In this, the circuit judge was in error because as was pointed out in the case of Chicago, R. I. & P. R. Co. v. Sturm (174 U. S. 710, 19 Sup. Ct. 797), the Supreme Court of the United States has determined that exemption laws are not a part of the contract but rather a part of the remedy and subject to the laws of the forum.”
First, it may be noted that the case of Spring v. Randall, above cited by appellant, is not controlling because the judgment there sought to be satisfied was for necessaries, but here the decree which plaintiff seeks to satisfy is not for necessaries. If plaintiff’s decree were for necessities furnished to Mrs. Pilkewitz, the question with which we are now confronted would not arise. The issue in the instant case was not before the court in Spring v. Randall, supra.
And further it is apparent that when appellant relies upon the proposition that exemption laws have no extraterritorial force,- for which he cites numerous authorities, he confuses or fails to make a distinction between a litigant’s rights arising from statutory provisions for exemptions, and the contractual rights of such a party. In the instant case we are not concerned with statutory exemptions, except that the New York statute provides for such a contract as exists between these appellees. The sole question is one of contractual rights.
The primary and controlling question presented on this appeal is whether in this suit in Michigan the contract by which the rights of the parties are determined is to be held valid as a New York contract and one that is to be performed in accordance with the law of New York, which is specifically made a part of the contract. It is important to note that the fund in the possession of the New York Life Insurance Company was placed there by the mother of Mrs. Pilkewitz, and that no portion of such funds ever belonged to Mrs. Pilkewitz. Nothing appears in this record which in any way militates against the right and power of the mother of Mrs. Pilkewitz to have made a contract of the character here in suit and to have provided therein that it should be performed in the State of New York and that the rights arising from such contract should be governed by the law of that State. There is no evidence or claim of fraud in the instant case. The New York statute provides specifically for such a contract and exempts its benefits from such a claim as plaintiff seeks to enforce in the instant case. In Crossman Co. v. Rauch, supra, the court of last resort in New York has recently said:
“If the quoted provision of section 15 of the personal property law be deemed ambiguous, it should be liberally construed in order to effectuate the humane purpose embodied in the statute. The spirit of the act should control its construction so that ‘the humane purpose of preserving to the unfortunate or improvident debtor or his family the means of obtaining a livelihood and prevent them from becoming a charge upon the public.’ * * *
“We think, however, that the act in question is a clear and unambiguous statement of the purpose of the legislature to exempt from legal process, except in an action to recover for necessaries, the benefits accruing after the death of the insured under a trust or other agreement relating to the proceeds of a life insurance policy left with the insurance company where the parties to the trust or other agreement agree that such benefits shall be so exempt.”
The substantive provisions of a contract, valid by the law of the State where the contract is made and is to be performed, create a right of property enforceable in another jurisdiction provided it is not contrary to the public policy of the forum. Seamans v. Temple Co., 105 Mich. 400 (28 L. R. A. 430, 55 Am. St. Rep. 457); Curtis v. Mueller, 184 Mich. 148. Refusal of courts in other jurisdictions than the place of contract to enforce such provisions is a violation of the full faith and credit clause of the Federal Constitution (U. S. Const, art. 4, § 1). Supreme Council of Royal Arcanum v. Green, 237 U. S. 531 (35 Sup. Ct. 724, L. R. A. 1916 A, 771); Modern Woodmen of America v. Mixer, 267 U. S. 544 (45 Sup. Ct. 389, 41 A. L. R. 1384).
“Where a contract of life insurance is made wholly in and subject to the laws of one State, the law of another State cannot determine the substantive rights created by the contract. * * *
“Eefusal by the courts of another State to recognize the right thus arising under the statute, was a failure to give full faith and credit to a ‘public act’ of the State in which the contract was made and the cause of action accrued. Const, art. 4, § 1.” John Hancock Mutual Life Ins. Co. v. Yates (syllabus), 299 U. S. 178 (57 Sup. Ct. 129).
To the same effect, see Ætna Life Ins. Co. v. Dunken, 266 U. S. 389 (45 Sup. Ct. 129) ; Boseman v. Connecticut General Life Ins. Co., 301 U. S. 196 (57 Sup. Ct. 686, 110 A. L. R. 732). The law set forth in the foregoing citations has been followed in recent decisions of this court. State of Ohio, ex rel. Fulton, v. James N. Purse, 273 Mich. 502; Alropa Corporation v. King’s Estate, 279 Mich. 418.
In appellant’s brief, Kaplan v. Peyser, 273 N. Y. 147 (7 N. E. [2d] 21), is cited in support of the contention “that even in the State of New York an insurance trust agreement cannot deprive a court of equity of jurisdiction and control over the income or surplus of trust funds accruing from income, not required for the fair support of the beneficiary.” Kaplan v. Peyser, supra, has no bearing upon the question of law with which we are here concerned. That case, involving a trust fund or the income therefrom, has to do with general statutory exemptions from execution. It in no way involves section 15, personal property law (chap. 41, consolidated laws of New York [40 McKinney’s Consol. Laws, § 15, Cahill’s Consol. Laws, chap. 42, §15]), relating to the proceeds of life insurance and upon which these appellees rely.
The order entered in the circuit court dismissing the bill of complaint is affirmed, with costs to appellees.
Wiest, C. J., and Biishnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. Butzel, J., did not sit. | [
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Reid, J.
Plaintiff filed suit for divorce; defendant filed a cross bill and was granted a decree for divorce thereon, plaintiff in the meantime having withdrawn her bill of complaint and having* made no contest over the divorce. The only dispute was over the custody of the children of the marriage, Jacqueline Louise, born September 29, 1939, and Richard Lee, born March 26, 1944. The decree awarded custody of both children to the plaintiff, provided, however, that the children shall be kept at the home of plaintiff’s sister and her husband, Mr. and Mrs. Clarence Harter, who reside near Paw Paw. Defendant and cross plaintiff appeals from the award of custody only.
The parties were married on March 3, 1939, and have resided in Michigan during their married life. Neither party had been married before. Excepting' for a separation for about 30 or 40 days after a quarrel during the year following their marriage, no misconduct of any sort was proven against appellant.
Cross defendant, appellee, says in one of her letters to appellant, dated October 11, 1945, during his absence in service, “I thought I was perfectly happy and had all I would ever want out of life.” That statement seems to describe the married life of the parties, except for the quarrel five years previous to the making of the quoted statement, and until appellee became infatuated with another man during her husband’s absence.
Appellee received from the government an allotment of $100 per month as appellant’s dependent for herself and the children during appellant’s service, but she concluded to work out and arranged that the daughter Jacqueline stay at the home of a Mr. Harold Hubbard and his mother, who were friends of appellee, and owners of the house in which appellee lived.
Shortly after the son Richard was born, appellee took him to the residence of her sister, Mrs. Harter, above mentioned, where he has been taken care of for 18 to 20 months. Mrs. Clair Corey, mother of appéllant, testified she always felt free to drop into the home of the parties to this case every- two weeks or oftener before appellant went into the United States service, and the parties lived at Mrs. Corey’s home for a few months when Jacqueline was less than a year old. Since then Mrs. Corey has had. Jacqueline about three months and, also, had Jac queline for about two weeks about Christmas, 1944. Mrs. Corey has had the boy Bichard for about 10 days only-in July, 1945, but frequently called to take him to Mattawan on week-ends.
The circuit judge relied upon his investigator, who investigated the homes of the Hubbards, the Coreys and the Harters, and reported that all three homes are suitable places for the two children to stay.
The circuit judge found among other things as follows: •
“The plaintiff has created a terribly deplorable situation. Of course, she could not possibly give her children, or either of them, the true, genuine, honest-to-goodness, motherly, parental care to which they were entitled while she was not only going about with another man frequently at night -until midnight and after and actually having another man up in her same apartment.
“I take it from ail that has been said about the older child, that she is a bright, intelligent, observing youngster, old enough to know that she had a father, old enough to know that the man that was living with her mother was not her father. How can anybody claim that that is proper parental care, being the sort of a good mother to which every child is entitled. No, there is no excuse fqy the plaintiff. It was a cruel, heartless thing. .She might have had some grievance against her husband; he may be rough and cruel at times. Perhaps it was, .with his prolonged absence, a relief from real or imaginary unpleasantness. Perhaps she grasped at the opportunity to become intimate with another man.
“Well, 'she was able to stand it and accept the hundred dollars a month allotment money until August of 1945; in other words, until othe war was ove.r. The European war ended in the spring; the Japanese, war ended in August, and then all the yars were over, and she knew- that. She knew her husband was about — should be coming home most any time, perhaps within a few months. She knew that and so finally when confronted with his return, his probable return within the then near future, she decided to let him know that she was through with him. She was able to stand it up to that time; been able to write bim letters as a wife should; been entirely willing to accept the allotment money, not only for the children, but for herself, up to that time, and then when she envisaged his probable return, she decided it was time to call it off, and she proceeded to do so. * * *
‘ ‘ One child was one place and the other child was most of the time at another, place. She was out working finally. She says her doctor told her she had to get out and circulate among people. Probably he did, but, of course, she doesn’t claim, nor could she claim, that her doctor told her to invite men in to stay at her apartment, or to go to the dancing and drinking places and stay until well after midnight, well into the morning. She doesn’t claim that her doctor advised the things that she did that were detrimental to her family life. The doctor wouldn’t advise that.
“Well, the defendant finally came home. He had been warned not to come homo. She had told him as explicitly as possible for one person to tell another to keep out and in spite of it all, he persisted. It is unfortunate. I suppose it is hard for a man to really believe some things.
“He wouldn’t believe it. He insisted on staying there for 30 days. She refused to recognize him as 'her husb'and, refused to live with him as his wife. Nevertheless, he stayed there.”
A careful consideration of the record convinces us that the above cited findings are correct.
In the instant ease, the mother’s evil example of immoral conduct committed with the knowledge of her six-year-old daughter and carried on m the same residence where the daughter was living, justifies and requires the conclusion that it is for the best interests of the two children that they should be left in the 'custody and control of their father, who is without fault, rather than in the control of their mother, who has been so far at fault. We further consider that it would be for the best interests of the two children that they be brought up together in the same household if it is fairly within the ability of their custodian so to do.
A decree may be entered in this Court awarding the custody of the two children of the parties to the father Roger Harry Ambs, appellant, to be kept by and to be under the control of his parents until the further order of the court and providing that, while thQ two children are provided for by their said father, the award of alimony for the support of said children shall be set aside; and further providing that the case be remanded to the trial court to order terms for visitation by the mother with her •children, and also for such further order or orders from time to time as changed conditions shall be found to require. Other provisions in the decree as entered are affirmed. No costs.
Carr, C. J., and Butzel, Bushnell, Sharpe, Boyles, North, and Dethmers, JJ., concurred. | [
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Butzel, J.
Vernon A. Allen, plaintiff and appellant herein, brought suit for divorce against Eldora Allen, defendant, on February 28,1946. The parties have been married over 12 years during most of which time they seemed to get along with each other quite satisfactorily. They have two sons, one 7 and the other 11 years of age. Plaintiff charges his wife with extreme cruelty, alleging that she has an ungovernable temper, that she repeatedly and unjustly accused him of infidelity, and that she indulged in bickering and faultfinding to such an extent that he was compelled to leave home. Defendant denies most of the charges, but alleges that her accusations were well justified, that plaintiff overindulged in the use of liquor, and that his conduct toward her was such as to provoke one of the most equable temperament. Defendant filed a cross bill in which she charges plaintiff with extreme cruelty and seeks a decree for separate maintenance.
The testimony indicates that both plaintiff and defendant are frugal and hard working. Defendant took good care of the children and the home and has been working in a cafeteria to supplement the family income since plaintiff left her. Plaintiff is himself an industrious person who has enjoyed steady employment for many years. Notwithstanding the fact that occasionally he drank’to excess and in one or two instances came home intoxicated, there is no showing that he has ever neglected the needs of his family. It is true that there were some actions on his part that would have aroused the suspicions of a person more trusting than defendant, nevertheless, the record does not even remotely support the allegation of infidelity. Plaintiff’s refusal to make proper explanation to defendant resulted in further distrust and the nagging and bickering complained of by plaintiff inevitably followed. ■
There are two young children who require the careful guidance and affection of both parents. The latter by mutual forbearance and joint effort are in a position to restore the respect and consideration which once prevailed in their marriage. The record shows that neither of the parties is without fault and the trial court so held. We are entirely in accord.
The decree dismissing the bill and cross bill are herewith affirmed, without costs to either party.
Carr, C. J., and Bushnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Carr, C. J.
For some time prior to October 7, 1944, plaintiff’s father, Joseph V. Flynn, was employed by defendant Western Board & Paper Company. On the date referred to he suffered an accidental injury in the course of his employment, such injury resulting in death on the same day. At the time of the father’s death plaintiff was 16 years of age, and for some years had been living with his father in a room or apartment in the city of Kalamazoo. Claiming dependency under the provisions of the workmen’s compensation law (Act No. 10, Pub. Acts 1912 [1st Ex. Sess.], as amended [2 Comp. Laws 1929, § 8407 et seq. (Stat. Ann. § 17.141 et seq.)]), plaintiff filed his petition with the department of labor and industry asking that compensation be awarded to him in accordance •with the statute. A hearing was had before a deputy of the department, who made a finding of partial dependency and granted compensation to plaintiff at the rate of $6.54 per week until the further order of the commission but not exceeding 400'weeks. On appeal the compensation commission of the department reversed the award, finding plaintiff was not, in fact, dependent upon his father for support and maintenance when the accident happened, and was, therefore, not entitled to compensation benefits. Prom shch order plaintiff has appealed.
The testimony taken cm the hearing before the deputy commissioner discloses that plaintiff became 16 years of age on July 19, 1944. During the preceding year he had attended a public school in Kalamazoo, being enrolled as a student in the junior vocational school. After school was out in June, plaintiff, according to his testimony, worked at variou's odd jobs, primarily for the purpose of obtaining spending money. How much he actually earned at such work is not shown by the record. On September 18, 1944, he obtained employment at the plant of the Sutherland Paper Mills in Kalamazoo, where he worked 40 hours per week at 64 cents per hour. Plaintiff remained so employed until after the father’s death, at which time he took up his residence with a sister.
During the year preceding' his death Joseph Flynn earned in his employment a total of $871.60. The testimony indicates that he paid the rent of the room or apartment in which he and plaintiff lived, that he bought food for their use, and that he purchased clothing for himself and plaintiff. On behalf of the latter it is claimed, in substance, that notwithstanding his employment and the fact that he was earning therein practically the same weekly wage that his father received, plaintiff was dependent at the time of the death of the father on the latter’s earnings. Stress is laid on the claim that in September, 1944, before he began working at the Sutherland Paper Mills, plaintiff discussed the situation with the principal of his school, Mr. Andrus, informing the latter that he wished to work for a while, rather than to return to school, in order that he might earn money for clothes. Mr. Andrus, who was a witness in plaintiff’s behalf on the hearing, consented to such plan. ■ Apparently he expected plaintiff to return to school after fulfillment of the purpose in question. Mr. Andrus further testified that plaintiff actually had returned to school after his father’s death, but in this the witness was evidently in error. Plaintiff stated in his testimony that at the time of his conversation with Mr. Andrus he intended to return to school, and would have done so had it not been for his father’s death.
Under the provisions of 2 Comp. Laws 1929, § 8422 (Stat. Ann. § 17.156), a child under the age of 16 years is conclusively presumed to. be wholly dependent for support upon the parent with' whom such child is living at the time of the parent’s death. The following section of the act, as amended by Act No. 245, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 8423, Stat. Ann. 1946 Cum. Supp. §17.157), further provides that:
“ Questions as to who constitute dependents and the extent of their dependency shall be determined as of the date of the injury to the employee, and their right to any death benefit shall become fixed as of such time, irrespective of any subsequent change in conditions.”
It is settled by prior decisions of this Court that, except in instances where the conclusive presumption controls, dependency is a question of fact. Miller v. Riverside Storage & Cartage Co., 189 Mich. 360 ; Moll v. City Bakery, 199 Mich. 670.
Under 2 Comp. Laws 1929, § 8451, as amended by Act No. 245, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 8451, Stat. Ann. 1946 Cum. Supp. § 17.186), the findings of fact made by the compensation commission of the department of labor and industry are, in the absence of fraud, conclusive. It has been repeatedly held that under said section this Court may not disturb a finding by the department of labor and industry if there is competent testimony to support it. Flanigan v. Reo Motors, Inc., 300 Mich. 359; Clore v. Swift & Co., 301 Mich. 732; Stewart v. Lakey Foundry & Machine Co., 311 Mich. 463; Ryder v. Johnson, 313 Mich. 702.
Certain witnesses for plaintiff gave testimony indicating that he was dependent on the earnings of his father, at least prior to the time that plaintiff became employed by the Sutherland Paper Mills. The testimony of plaintiff himself was somewhat contradictory. He claimed before the deputy commissioner that he had been suppórted by his father down to the date of the latter’s death. He also testified as follows:
"Q. The first two weeks that you worked, your father gave you 35 cents a day for lunch, did he not?
“A. Yes.
“Q. Then when you got your first pay, you paid your father back?
“A. Yes.
“Q. You have been supported, — supporting yourself since September 18, 1944, is that right?
“A. No, not really. All I have been doing is buying my clothes.
“Q. Since September 18, 1944, your father, had not supported you, had he?
“A. What?
“Q. Since September 18, 1944, your father had not supported you, had he ?
“A. No.
“Q. You had supported yourself since September 18, 1944, is that right?
“A. Yes.”
Presumably for the purpose of impeaching statements made by plaintiff in which he, in effect, claimed dependency, defendants offered in evidence on the hearing before the deputy, a statement given by plaintiff, on October 11, 1944, to an adjuster for the defendant insurance company. Plaintiff conceded therein that he had supported himself since September 18,1944, and that his father had not supported him. He also stated that since he started to work he paid his father $5 a week for board and room. The statement in question was objected to by counsel for plaintiff on the ground that no copy of it was furnished to the plaintiff. Belianee was apparently placed on Act No. 10, pt. 3, § 5a, Pub. Acts 1912 (1st Ex. Sess.), as added by Act No. 24, Pub. Acts 1935 (Comp. Laws Supp.' 1940, § 8444-1, Stat. Ann. §17.179). Said section reads as follows:
“If the employer, insurer or any agent of either, shall take a statement from an injured employee,' such statement cannot be used as evidence against said injured employee unless a copy thereof is given to such injured employee at the time said statement is taken.”
It is obvious that the section quoted has no application other than to statements taken from an injured employee. The writing given by plaintiff to the adjuster was not incompetent for the reason advanced by counsel. It may be assumed that it was considered by the deputy and, also, by the compensation commission.
The record also discloses that a petition was presented to the compensation commission for the purpose of obtaining approval of an agreement for the settlement of plaintiff’s claim. At the hearing on this petition plaintiff testified, and a transcript of his testimony was offered in evidence on the hearing before the deputy commissioner, presumably for the purpose of impeaching plaintiff’s claim of dependency. On such hearing plaintiff testified in part before the commission as follows:
UQ. So from June to October you were not in attendance at school! >
“A. Yes.
“Q. "What were you doing during that period?
“A. "Working.
“Q. So you were supporting yourself?
“A. Well—
“Q. "What were you earning per week?
“A. About $27.50.
“Q. Was that sufficient to take care of your own needs, clothes and board and room?
“A. ' Well, yes.”
Counsel for plaintiff stress the claim that in view of plaintiff’s testimony concerning his intention to return to school the employment at the Sutherland Paper Mills should be regarded as merely temporary in character and not inconsistent with the claim of.eontinuéd dependency on the father’s earnings. It is urged that plaintiff’s intention to return to school should be regarded as a material factor in the case. What plans,-if any, the father may have had in mind are not shown by the record. It does not appear that plaintiff was under any actual compulsion to return to school. In fact, the record suggests that the school authorities did not maintain a close check on what he was doing. The school principal, Mr. Andrus, testified that he did not know that plaintiff was employed by the Sutherland Paper Mills, and he did not claim in his testimony that he took any steps whatever to induce plaintiff to continue his studies. Under the circumstances indicated by the record it is- a matter of conjecture as to whether plaintiff would have left the employment in which he was engaged, and returned to school, if his father had not received the fatal injury.
On this record it cannot be said that there was no evidence to support the finding of the compensation commission, especially in view of the testimony of plaintiff. Counsel for plaintiff recognize the general rule as declared by the statute and applied in the decisions above cited. Complaint is made, however, that plaintiff’s testimony with reference to the matter of intent was not considered by the commission. In their brief counsel say:
“We acknowledge that the department’s-findings of fact are final and conclusive. If the department in its opinion had mentioned and discussed the evidence produced by the plaintiff, that the school principal had an agreement with the boy, to the effect that the boy intended to return to school as soon as he had earned sufficient moneys to buy clothes, and after discussing the evidence produced by the plaintiff, had made a finding of fact that the evidence was not sufficient as a matter of fact arid of law to establish a dependency, then we could have no fault to find. It is the department’s, complete by-passing of the evidence produced in relation to the intent of the parties that we object to, and urge that such evidence should be reviewed by this Court.”
We think it may be assumed, that the compensation commission, in reaching its determination that plaintiff had not established dependency, considered all the evidence before it. In any event if this Court, after considering the record, finds that there wa^ evidence to support such determination, then the order of the commission must be sustained.
In Goines v. Kelsey Hayes Wheel Co., 294 Mich. 156, it was said:
“It is well settled .that if the department fails to make a finding upon a material issue, we may examine the testimony taken at the hearing to determine whether there is any competent evidence to support the award. See Foley v. Detroit United Railway, 190 Mich. 507; Harris v. Castile Mining Co., 222 Mich. 709; Trice v. Orchard Farm Pie Co., 281 Mich. 301.”
Likewise, in the earlier case of Thayer v. Berkey & Gay Furniture Co., 220 Mich. 332, this Court, in commenting on the failure of the department to make a specific finding on a certain point, said:
“Unfortunately, the board made no 'written findings of fact and there is no recital in the order that offers the slightest suggestion as to how it arrived-at the amount of her loss. Presumptively, however, they followed the provisions of the statute appli cable to cases of permanent partial disability, and awarded ber 60 per cent, of tbe difference between the weekly wage she was receiving at the time of the injury, and what she was subsequently able to earn in the same employment. They had before them the evidence of doctors, and others, as to the character and extent of her injury. * * * We think there was evidence from which the board could determine the extent of her injury and her diminished earning capacity. Its finding is, therefore, conclusive. ’ ’
See, also, Criss v. Taylor Produce Co., 313 Mich. 457, where the Court declined to reverse a holding of the commission to the effect that the employee died “ ‘leaving no dependents within the meaning of the act, ’ ” on the ground that there was evidence in the case to support the general conclusion, and in consequence the Court was “bound by the commission’s finding.”
The order of the compensation commission of the department of labor and industry is affirmed, with costs to defendants.
Butzel, Bushnell, Sharpe, Boyles, Reid, North, and Dethmers, JJ., concurred.
The powers and duties of the industrial accident board, here referred to, have now been transferred to, and vested in, the department of labor and industry and its compensation commission. See 2 Comp. Laws 1929, §§ 8310, 8312, as amended by Act No. 241, Pub. Acts 1943 (Oomp. Laws Supp. 1945, §§8310, 8312, Stat. Ann. 1946 Cum. Supp. §§17.1, 17.3). — Reporter.
See footnote, ante, 36.—Bepoetek. | [
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Sharpe, J.
On April 2, 1946, plaintiffs brought a suit in the circuit court of Wayne county in which they allege that on January 1, 1930, they were the owners of four parcels of real estate in the city of Detroit, Michigan; that from 1930 to 1944, the city of Detroit levied and collected taxes on real and personal property within its corporate limits in excess of the 2 per cent, limitation permitted by law; that from 1931 to 1944, both inclusive, defendant city levied taxes against the mentioned parcels of land; that because plaintiffs did not pay the taxes so levied, defendant city purported to bid in and purchase property and claim ownership of the same; that by reason of defendant’s demands for payment of the sums assessed against the properties, plaintiffs deposited with defendant certain sums between April 17, 1942, and October 1, 1944, totalling $6,270; and that on May 22, 1945, plaintiffs paid to defendant, under protest, the sum of $10,207.87 claimed as the balance due for taxes, penalties and interest.
The relief sought was the cancellation of all taxes levied and collected against the above mentioned parcels of land; and that defendant be required to refund and return to plaintiffs all moneys received by it amounting to the sum of $16,477.87. ,
Defendant filed a motion to dismiss the bill of complaint based upon the following:
‘£ 1. Because this court does not have jurisdiction over the subject matter of this litigation.
££2. Because plaintiffs have or had an adequate remedy at law in a suit in assumpsit for money had and received.
££3. Because plaintiffs have or had an adequate remedy at law, as provided in 1 Comp. Laws 1929, § 3444, as amended (Stat. Ann. § 7.97).
££4. Because this cause cannot be transferred to the law side of the court as the taxes involved in the bill of complaint, although ostensibly paid under protest, did not comply with the express provisions of 1 Comp. Laws 1929, § 3444, as amended, in the following respects:
££(a) Because the alleged written protest accompanying the payment of the taxes in question did not set forth specifically the reasons for the alleged illegality of said taxes.
£ ‘ (b) Because any action to recover the taxes paid is barred by reason of lapse of time, said payment having been made in May of 1945, whereas said statute requires suit to recover to be made within 30 days of said payment and not afterwards.
££5. Because a portion of the taxes paid, for which refund is requested, was paid voluntarily and without protest several years ago and, therefore, recovery of the same may not be had either in an action at law or in chancery.”
It also appears that on July 25,1945, a complaint, similar to the one in the case at bar, was filed in the Federal district court against defendant city seek ing the same relief. On August 9,1945, the city filed a motion to dismiss for the reason, among others, that “this court does not have jurisdiction because the plaintiffs have an adequate, plain, speedy and efficient remedy in the courts of the State of Michigan. ’ ’ On February 26, 1946, an order was therein entered dismissing the bill of complaint, including therein as a reason: ‘ ‘ That the plaintiff has an adequate remedy in the courts of the State of Michigan and therefore this court does not possess jurisdiction over the subject matter.”.
The instant cause came on for hearing and the trial court entered a decree dismissing plaintiffs’ bill of complaint, giving as his reason therefor:
“That the alleged protested payment does not comply with the statute in that the specific grounds of the protest are not stated therein. It is unnecessary to decide this question, however, as suit was not commenced within 30 days, as the statute requires. If plaintiffs’ alleged statement of protest could be said to have, complied with the statute, they had an adequate remedy at law. Salisbury v. City of Detroit, 258 Mich. 235; General Discount Corp. v. City of Detroit, 306 Mich. 458. However, suit was not started in assumpsit within the period required by the statute and, therefore, action for recovery of. the taxes alleged to have been paid under protest, is likewise barred. Lingle v. Township of Elmwood, 142 Mich. 194.”
Plaintiffs appeal and urge that the time within which they must file suit is governed by general law; and that 2 Comp. Laws 1929, § 3444, as amended, has no application to the facts in the case at bar either to the 30-day period or to the type of protest to he made. The reason being that there was no occasion to include in section 3444 any machinery or procedure in regard to cities, inasmuch as municipalities with charters have an established procedure for the disposal of tax refunds; and that the charter of Detroit provides such procedure in the following:
“Sec. 11. The common council shall audit and allow all accounts chargeable against the city, but no unliquidated account, or claim, or contract shall be received for audit or allowance unless it-be accompanied by an affidavit. * * * It shall be -a sufficient bar and answer to any action or proceeding in any court for the collection of any demand or claim against said city that it has -never been presented to the common council for audit or allowance or if on contract that it was presented without said affidavit and rejected for that reason or that the action or proceeding was' brought before the common council had a reasonable time to investigate and pass upon it.” (Title 6, chap. 7.)
‘ ‘ Seo. 30. The common council may also provide and ordain by ordinance, that whenever it shall appear that any taxes or assessments have been illegally assessed or collected, the common council may, by a vote of two-thirds of all the members-elect, direct and cause the amount so collected to be refunded out of the contingent fund, or in case it has not been collected, to vacate the assessment, and fix upon an amount, to be received in full of such tax or assessment, and no such action on the part of. the council, under such ordinance, shall in any way affect or invalidate any other tax or assessment assessed, levied, or collected in said city.” (Title 6, chap. 4.)
Plaintiffs further claim that the impossibility of complying with both the statute and the charter manifests an intention that section 3444 has no application to refunds of taxes paid to the city of Detroit.
Section 3444, 1 Comp. Laws 1929, as amended by Act No. 234, Pub. Acts 1941, and Act No. 159, Pub. Acts 1945 (Comp. Laws Supp. 1945, § 3444, Stat. Ann. 1946 Cum. Supp. § 7.97), provides in part as follows:
“Any person may pay the taxes or special assessments, or any 1 of the several taxes or special assessments, on any parcel or description of land, or on any undivided share thereof, and the treasurer shall note across the face of the receipt in ink any portion of the taxes or special assessments remaining unpaid. He may pay any tax or special assessment, whether -levied on personal or real property, under protest, to the treasurer, specifying at the time, in writing, signed by him, the grounds of such protest, and such treasurer shall minute the fact of such protest on the tax roll and in the receipt given. The person paying under such protest may, within 30 days and not afterwards, sue the township for the amount paid, and recover, if the tax or special assessment is shown to be illegal for the reason shown in such protest.”
Section 3500, 1 Comp. Laws 1929 (Stat. Arm. § 7.161), provides in part as follows:
' ‘ ‘ This act shall be applicable to all cities and villages where not inconsistent with their respective charters. With such exceptions, the provisions herein as to supervisors, township treasurers, and boards of review,, shall include all assessing and collecting officers, and all boards whose duty it is to review any assessment roll. The word township may include city, ward or village.”
A situation similar to that in the present case arose in General Discount Corp. v. City of Detroit, 306 Mich. 458. That case involved an action for the recovery of taxes paid on personal property for the years 1921 to 1932 inclusive. The taxes had been illegally assessed and action to recover the amount so paid was begun in 1938. We there said:
“1 Comp. Laws 1929, § 3444, provides that a person may pay any tax, whether levied on personal or real property, under protest to the treasurer, specifying at the time in writing signed by him the grounds of such protest, and the treasurer shall minute the fact of such protest on the tax roll and receipt given, that thereupon the person paying under such protest may within 30 days and not after-wards, sue for the amount paid and recover, if the tax is shown to be illegal, for the reasons shown in the protest.”
In our opinion an action to recover for taxes paid to the city of Detroit is governed by section 3444. In view of the fact that plaintiffs’ suit was not brought within the time required by the act there can be no recovery. Moreover, the written protest filed by plaintiffs did not specify grounds of illegality.
It is also urged by plaintiffs that defendant is ¿stopped from urging the defenses noted in its motion to dismiss. We do not find that the reasons now urged by defendant for the dismissal ofxplaintiffs’ bill of complaint are inconsistent with its position in the Federal court case. In the Federal court, defendant urged that plaintiffs had an adequate remedy in the courts of the State of Michigan. In the present case defendant again urges that plaintiffs have or had an adequate remedy at law. The fact that plaintiff's by inaction lost their remedy in the State court does not make defendant’s contention inconsistent.
Plaintiffs also urge that their suit is properly brought on the chancery side of the court. The sole purpose of plaintiffs’ suit is the recovery of money paid for taxes. Such, an action can be brought only on the law side of the court. See Long v. Village of Dundee, 159 Mich. 320.
Plaintiffs have urged other issues in their reasons and grounds for appeal, but we forego decision on them as decision in this case is controlled by the issues heretofore discussed.
The decree dismissing plaintiffs’ bill of complaint is affirmed, with costs to defendant.
Carr, C. J., and Btjtzel, Bushnell, Boyles, Reid, North, and Dethmers, JJ., concurred.
See 1 Comp. Laws 1929, § 2230 (Stat. Ana. § 5.2073). — ^Reporter, | [
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Sharpe, J.
Defendant, Alex George, was charged with and pleaded guilty to the crime of taking indecent liberties with a seven-year-old girl. Before sentence, his case was referred by Judge Gillis to the probation and psychopathic division of recorder’s court. O-n October 10,1945, the trial court placed defendant on probation for 3 years and ordered bim to move out of the neighborhood. On January 14, 1946, defendant was brought before Judge Gillis and sentenced for alleged violation of probation to the State jprison at Jackson for a minimum term of 5 years and a maximum term of 10 years.
On February 13, 1946, defendant, through his counsel, filed a motion to set aside the sentence of January 14,1946. On April 4,1946, an order was entered setting aside the sentence and granting a rehearing.
On April 17, 1946, defendant was again brought before Judge Gillis and charged by the court with violation of his probation as follows:
“1. Not moving into the country, away from the neighborhood in which there were children, as he was told by the court.
“2. Failure to take treatment from a private psychiatrist.
“3. Inability to respond to treatment because of defendant’s attitude.”
Defendant pleaded not guilty to the charges and urged that said grounds of violation were illegal and void because not made a part of defendant’s sentence on October 10, 1945, or at any subsequent time by an amended order of probation. The trial court after hearing some testimony found defendant guilty and again sentenced him to prison for a period of 5 to 10 years with credit to be allowed for the time he served under his former sentence.
The record shows that on October 29, 1945, the court instructed the defendant in chambers that he move into the country and away from a neighborhood in which there were children; and that he take treatment from a private psychiatrist and bring a report from the doctor once a month. These instructions were not made in the form -of a written order nor dictated to a reporter for the record, but were given in the presence of a deputy officer of the recorder’s court.
The prosecuting attorney agrees with defendant that the oral unrecorded instructions upon which Judge Gillis based his finding of violation of probation were not legal orders of probation. ■
Certain statutory terms of probation are a part of every sentence. Section 17373, 3 Comp. Laws 1929, as amended by Act No. 308, Pub. Acts 1931 (Comp. Laws Supp. 1940, §17373, Stat. Ann. §28.1133), provides:
“ (1) That the probationer shall not, during the term of his probation, violate any criminal law of the State of Michigan, or any ordinance of any municipality in said State;
“ (2) That he shall not, during the term of his probation, leave tbe State without the consent of the court granting his application for probation;
“ (3) That he shall make a report to the probation officer, either in person or in writing, monthly, or as often as the latter may require.”
This same section also provides:
“The tíourt may impose such other lawful conditions of probation, including restitution in whole or in part 'to the person or persons injured or defrauded, as the circumstances of the case may require or warrant, or as in its judgment may be meet and proper.”
Section 17372, 3 Comp. Laws 1929 (Stat. Ann. § 28.1132), provides in part that:
“The court shall by order, to be filed or entered in the cause as the court may direct by general rule or in each case fix and determine the period and conditions of probation and such order, whether it is filed or entered, shall be considered as part of the record in the cause and shall be at all times alterable and amendable, both in form and substance, in the court’s discretion.”
We think it mandatory that the order above referred to shall be filed or entered in the cause. Oral unrecorded instructions cannot be filed or entered as required by the statute. Moreover, in People v. Pippin, 316 Mich. 191, we said:
“The defendant had a right to know the conditions with which he was required to comply. He1 is presumed to know the conditions prescribed by law.' No such presumption attaches to such other conditions as existed only in the mind of the judge, unexpressed to the defendant either orally or in the order for probation, and no violation of these warrants revocation of probation.”
We conclude that the oral instructions given defendant on October 29, 1945, were not valid conditions of probation as they were not filed or .entered in the cause. The order- of Judge Gillis entered April 17, 1946, revoking the probation of defendant and the sentence entered thereafter is set aside and vacated. Defendant is remanded for the entry of a correct order of probation.
Carr, C. J., and Butzel, Bushnell, Boyles, Reid, North, and Dethmers, JJ., concurred. | [
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Reid, J.
This is an action at law on a policy of life insurance issued on January 31, 1941, to Warren Or. Hooper,' husband of plaintiff. Subject to certain limitations, the policy contained a double indemnity clause providing for $10,000 additional payment if insured’s death were caused by accident. Other than the double indemnity clause, the remaining provisions of the policy and the' amount of insurance payable thereunder are not in dispute and are enforceable without let or hindrance by reason of this decision. The case was tried upon an issue as to liability for the payment of the $10,000 provided for in the double indemnity clause. At the close of plaintiff’s proofs the trial court directed a verdict for defendant. Prom the judgment entered thereon, plaintiff appeals.
The disputed questions involved are: (1) Is the testimony sufficient to establish as a matter for the court’s determination that deceased was murdered or could the jury have properly found that his death was caused by some means not amounting to murder! (2) What is the proper construction to be given to the double indemnity provisions of the policy? Those provisions as far as pertinent are as follows:
“Supplementary agreement.for double indemnity in case of death from accidental means herein limited and provided
“Issued as a part of policy No. 513, 135A and attached thereto.
“In consideration of the application for this agreement, and of a special annual premium of $15.50, payable under the same conditions, in addition to, and as a part of, each regular annual premium due under said policy on the life of Warren G. Hooper during the remainder of its premium paying period, or until the insured reaches the age of 65' years, the' State Mutual Life Assurance Company of Worcester, Massachusetts, here grants the following double indemnity provision:
“If, while no premium is in default under this policy and double indemnity agreement, due proof shall'be furnished that the death of the insured occurred before he reached the age of 65 years as the. result of accidental drowning or bodily injuries sustained or contracted after the date hereof and effected solely through external, violent, and accidental means, directly and independently of all other causes, within 90 days after such injury was sustained, which injury is evidenced by a visible contusion or wound on the exterior of the body, (except in case of drowning and internal injuries revealed by an autopsy), the company agrees that, subject to the conditions and provisions specified herein, it will pay $10,000 or the sum specified as the amount of insurance on the first page of this policy contract (whichever is greater), in addition to the face amount of the said policy. Unless otherwise re quested, this said additional payment will be^made to the beneficiary or beneficiaries designated in the said policy and paid in -a single'cash payment upon receipt of due proof of death as aforesaid.
‘ ‘ This provision shall not cover homicide or death resulting directly or indirectly from self-destruction or any attempt thereat while sane or insane; or the commission of assault or felony by the insured; combat, war or any act of war; participation in an insurrection, riot, or strike; travel, or flight in any aircraft or balloon, or from being in, on, or about any kind of aircraft or balloon; participation ,in submarine operations, or descent or riding in a submarine ; from any physical or mental disease, illness, or infirmity; from sickness resulting from the eating of any form of food or drinking of any form of liquid; hemophilia; or bacterial infection other than that occurring in connection with,- or in consequence of, accidental bodily injuries; or from any kind of poisoning’, whether voluntary or otherwise, or asphyxiation; or from carhpn monoxide or gas, or fumes, of any kind, voluntary or involuntary, accidental or otherwise, taken, administered, absorbed, or inhaled. The company shall have the right and opportunity to examine the body and make an autopsy unless prohibited by law.
“The incontestability clause contained in the said policy is hereby modified so as to read as follows: ‘Except for nonpayment of premium and except as to provisions and conditions granting double indemnity in case of death from accident contained in the supplementary agreement attached to and made a part of this policy, this policy shall he incontestable . after it has been in force for full two years from the date of its issue.’ ”
Testimony waá produced to show the following-facts : The insured at the time of his death was a State senator. A “one-man” grand jury.had been conducting inquiry at Lansing concerning allega tions of - bribery of various members of tbe State legislature; insured was a witness before the grand jury; plaintiff testified she knew insured was helping the grand jury. 'The witness Modjeska, traveling south on the road between Lansing • and' Springport about 4:45 p.m. on January 11, 1945, saw insured’s Mercury sedan parked on tbe wrong side of tbe road about two miles north of Spring-port, beaded south, with tbe left rear end off tbe road, with smoké coming out of tbe side door; witness could not see inside tbe car; on tbe right rear door there was a bole in tbe glass like a bullet bole. Tbe witness stopped nearby and waited for about five minutes for some other person to come. While be was waiting, Modjeska walked to tbe front of tbe car and saw footprints on tbe left side of tbe car at tbe driver’s door; .there were no footprints coming to that step' from either direction but just footsteps (in tbe snow) going away. Mr. VanNocker was tbe first man to come along, and be was followed by Mr. Howard. Tbe three men went to tbe Mercury to investigate and upon Mr. Howard opening tbe left rear door, flames seemed to start up in tbe back seat from the air being admitted. Tbe men closed tbe rear door and opened tbe front door, and, saw tbe insured sitting there slumped over to tbe left toward tbe wheel. They saw no weapon in tbe car. Upon the flames starting up, they closed tbe door. Modjeska told tbe two other men that they could' take the body out of tbe car if they desired to, and Modjeska went to call tbe State police; when be came back tbe body was outside tbe car. ■ Modjeska later at tbe funeral home saw tbe same body. There were tbe marks of three bullets in tbe bead, one behind tbe right ear, one right under tbe left eye and one on top of tbe bead; there was a fourth bole where one of tbe bullets bad come out. Wit ness Mr. Hoffman, the undertaker who took Senator Hooper’s body to Springport, testified that apparently some one had thrown snow on the body to put the fire out; holes were burned through the clothing; there were burns on the skin and the forearm was burned badly clear to the elbow; 'the arm was cracked right open, the skin was cracked clear open; from the hip down the right leg was burned and there were places where the skin on the leg was cracked open and the rest of it was black down half way between the knee and ankle. No firearms were found in the car.
Neither plaintiff or defendant claims the -death could be considered suicide. Plaintiff claims that the jury could have found that the death of Senator ■Hooper was the result of the act of one with a deranged mind, or the result of an accident other than murder. For.the purposes of this civil action, we conclude that the testimony does, not indicate that the shooting of Senator Hooper was the act of an insane person.
Defendant in its -brief asserts that it -very clearly appears that Senator Hooper was murdered, and that no other conclusion could be drawn from the testimony. The finding by the trial judge was that the undisputed testimony showed that insured came to his death as the result of homicide. We conclude that at leást for the purposes of this civil action, the ruling by the trial court that the- death, was a ease of homicide, was a correct ruling.
We next consider whether the murder of Senator Hooper was, from- the standpoint of the insured, an accident.-
“An intentional homicide is an accident, within the meaning of an accident policy, if insured himself was in no way responsible for his death.” Furbush v. Maryland Casualty Co. (syllabus), 131 Mich. 234 (100 Am. St. Rep. 605).
. “It is a well-established rule that where insured is intentionally injured by another, and the injury is not the result of misconduct or an assault by the insured, but is unforeseen insofar as he is concerned, the injury is accidental within the meaning of accident policies,” 20 A. L. R. 1123, citing cases in United States supreme court and from 17 States, including the Michigan case of Furbush v. Maryland Casualty Co., supra.
See, also, 57 A. L. R. 972, where cases from five additional States are cited to like effect.
We find that although on the part of the person or persons shooting Senator Hooper, insured’s death was of malicious - design, yet so far as insured was concerned, his encounter with the murderer or murderers was an accident. In view of the foregoing authorities, we conclude that the deáth of Senator Hooper, in so far as concerns himself and his insurer, was the result of an accident.
The remaining question to be considered is whether or not liability in case of homicide, under the construction to be given to the double indemnity provisions of the policy, is excluded by the terms of the policy. The trial judge ruled that liability for death by homicide was excluded under the contract, and directed a.verdict for the defendant.
The double indemnity provision contains the following words, the construction of which are disputed, “This provision shall not cover homicide or death resulting directly or indirectly from,” followed by 12 specified exceptions.
It is plaintiff’s theory that the words, “homicide or death,” are modified by and subject to the modifying phrase, “resulting directly or indirectly from.” It is the theory of the defendant that the 12 exceptions pertain to' and modify only the word “death,” and that the sentence in question should be read as though there were* a comma or semicolon after the word ‘ ‘ homicide. ’ ’ Defendant claims that it is only the word “death” that is spoken of' as subject to the various exceptions, 12 in number, and that the word “homicide” stands separately as an entire bar to liability under the double indemnity provision in the policy in question; in other words, that proof of homicide of whatever nature and from whatever cause is a bar to recovery. •
We note that the phrase, “resulting directly or indirectly from,” could be considered to modify the word “death” when applied to any one of the 12 exceptions, and that it could reasonably be applied to the word “homicide,” and thus be considered to modify the word “homicide,” in at least eight of the exceptions, i.e., a homicide might be provoked or engendered directly or indirectly by “the commission of assault or felony by the insured;” by the insured engaging in “combat, war or any act of war;” or by the insured engaging in “participation in an insurrection, riot, or strike;” and further, that a “physical or mental disease, illness, or infirmity” might be an occasion.from which homicide could indirectly result; further, it could be considered that “bacterial infection other than that occurring in connection with, or in consequence’ of, accidental bodily injuries,” or “sickness resulting from the eating of any form of food or drinking of any form of liquid” could be used or created in the commission of homicide, and the same may be said concerning “poisoning, whether voluntary or otherwise, or asphyxiation” and “from carbon monoxide or gas, or fumes, of any kind, voluntary or involun tary, accidental or otherwise, taken, administered, absorbed, or inhaled.”
The policy in this case was prepared, printed and brought to the insured by the defendant for the insured’s acceptance- ' Under such circumstances, the ambiguity must be resolved against the insurance company. Accident Insurance Co. v. Crandal, 120 U. S. 527 (7 Sup. Ct. 685, 30 L. Ed. 740).
“There is no question but that, in a case of ambiguity, the language must be strongly construed against the insurer. The courts have no patience with attempts by a paid insurer to escape liability by taking advantage of an ambiguity, a hidden meaning, or a forced construction of the language in a policy, when all question might have been avoided by a more generous or plainer use of words. We have gone far in denying any such defense on the part of an insurance company. See Birgbauer v. Aetna Casualty & Surety Co., 251 Mich. 614.” Boesky Bros. Corp. v. United States Fidelity & Guaranty Co., 267 Mich. 628, 629, 630.
“It is a principle of law too well established in this jurisdiction and others .to need discussion or citation of authorities, that a policy of insurance couched in language chosen by the insurer must be given the construction of which it is susceptible most favorable to the insured; that technical constructions of policies of insurance are not favored; and that éxceptions in an insurance policy to the general liability provided for are to be strictly construed against the insurer. Pawlicki v. Hollenbeck, 250 Mich. 38.” Pietrantonio v. Travelers Ins. Co. of Hartford, Conn., 282 Mich. 111, 116.
We construe the provision in question in the light most favorable to the insured, and we find, in accordance with plaintiff’s theory, that' the phrase “resulting directly or indirectly from” modifies either the word “homicide” or the w'ord “death,” or both words, in every exception accordingly as the nature of the exception will' admit. Under the policy in question, death due to homicide would be no ground for recovery if the homicide resulted directly or indirectly from a condition listed in one of the 12 exceptions. There is nothing in the record to indicate that conditions such as are set forth in any of the 12 exceptions entered into the causation of Senator Hooper’s murder; all indications are to the contrary.
“When the action is brought upon an accident policy or upon the double indemnity provision of a life policy, it is incumbent upon plaintiff to show that death occurred through accidental means. The burden of proving accidental death and the consequent negativing of suicide is on plaintiff.” Dimmer v. Mutual Life Ins. Co., 287 Mich. 168, 172.
In. the instant case plaintiff met that burden by producing testimony clearly indicating that Hooper was murdered. If the defense had been urged that the death instead of being murder was suicide and therefore defendant not liable, the burden of showing that it was not suicide would have been on the plaintiff. The burden of showing that the death was within any other of the exceptions embodied in the policy would be upon the defendant.
£ £ This brings us to a consideration of the question whether, when the insured has shown the injury to be the result of an accident, the burden is then upon the defendant to show, by way of defense, that the accident was within the exceptions named in the certificate of insurance. We think this question must be answered in the affirmative.” Hess v. Preferred Masonic Mutual Accident Association of America, 112 Mich. 196, 203, 204 (40 L. R. A. 444).
The fact that the death of insured was homicide does not bar liability under the double indemnity provisions of this policy, in view of all the testimony.
The judgment appealed from is reversed and new trial granted; costs to await the result.
Carr, C. J., and Sharpe, Boyles, and North, JJ., concurred with Reid, J. | [
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North, J.
This is a suit in equity in which plaintiff seeks specific performance of an oral contract alleged to have been made by Richard Draper, now deceased, with Edward Farmer, plaintiff. It is plaintiff’s claim it was agreed in this oral contract that in consideration of plaintiff staying with Richard Draper and doing the work required of him for Draper and his wife during the remainder of their lives, that Draper upon his death would leave all his property to plaintiff. Defendants deny the making of such oral contract, and as a part of their defense introduced in evidence the will of Richard Draper executed May 6, 1935, wherein Vivian Garrett, one of the defendants herein, was made the sole beneficiary. Draper died September 9, 1935. The circuit judge found the alleged contract proven and entered a decree for specific performance. Vivian Garrett has appealed; but the other defendant, the executrix of Draper’s estate, has not appealed.
There is testimony showing that in 1916, when plaintiff was 15 years old, he was brought from another State to Detroit by his half brother, and that this was under an arrangement or agreement which the half brother had with Draper as to his taking the boy into his family, rearing him as his son, and if the boy did what was right he would have Draper’s property upon the latter’s death. At the time of this arrangement Richard Draper was separated from his wife, Ann Draper; and together with Elizabeth Jefferson he was operating a rooming and boarding house in Detroit. In 1921, after securing a divorce in 1920 from his first wife, Draper married Elizabeth Jefferson.
At the time of the court hearing plaintiff’s half brother who had brought him to Detroit was dead. So far as the record discloses there was no living person competent to testify as to the arrangement entered into between Draper and this half brother concerning plaintiff. But one of plaintiff’s witnesses, Berry Lyles, testified that Mr. Draper in 1922 told him the arrangement with the half brother was as follows:
“He (Draper) told me he got him and made a promise to his brother John, that he didn’t have no children and his wife didn’t have any, that he made a promise to his brother John, if he let him raise this boy he would raise him decent enough, and if the boy worked out to be all right, and they gone, he would never regret it, that everything they had would belong to him, because he had no relation whatever; that’s what he told me times and times.”
There was testimony by George M. Cook, a postal employee, that he wanted to purchase the home of Mr. and Mrs. Draper in 1931 and that Draper told him, “It is not for sale. This goes to my son Edward.”
Another witness for plaintiff, Mrs. Millie Henry, who together with her husband lived in Mr. Draper ’s home during the last months of his life, testified that during this time she heard Draper tell plaintiff the property belonged to him, that everything would go to him; and that plaintiff thereupon thanked Draper. This witness testified she heard like statements on several occasions. Mr. Henry testified that during the last illness of Draper plaintiff did tbe work about tbe house and also took care of Draper; and that on one occasion he heard Draper say to plaintiff who had been away from the home during part of an evening, “Where have you been? * * * You want to stay pretty close to me. * * * What I got will be yours when I am gone,” and plaintiff then replied: ‘ ‘ All right. I see. ”
There is abundance of testimony in the record to the fact that Draper repeatedly stated that it was his intention and desire plaintiff should have his property if plaintiff survived Draper and his wife. The latter died March 3, 1935, and as noted above Draper’s death occurred September 9, 1935. Neither of them left a surviving child or other near relative. There is testimony justifying the conclusion that during the 19 years intervening between the inception of this relationship and Draper’s death, plaintiff lived almost continuously in the Draper home, which for much of the period, if not all of it, was’ a boarding and rooming house. There is abundance of testimony that plaintiff continually and faithfully assisted the Drapers in the work about this place, even working at household duties during his off hours when he was employed in factory work. There is also testimony that when employed elsewhere he turned over his earnings, in whole or in part, to Mr. Draper. Plaintiff never married, and there is testimony that Mr. Draper did not want him to marry. The record is replete with testimony tending to establish performance by plaintiff of the oral contract under which he seeks to recover; and there is also the testimony of several witnesses of the acknowledgment and appreciation by Mr, Draper of such performance,
Notwithstanding this showing as to the alleged agTeement and its performance, Draper, as noted above, by a will executed May 6,1935, gave all of his property to appellant, Vivian Garrett. A fact urged in support of Draper’s satisfaction with the testamentary disposition of his property is that from the date of the will to the time of his death, about four months later, he had the will in his personal possession, but did not alter or destroy it. Just prior to the filing of plaintiff’s bill of complaint, the Draper will was admitted to probate in Wayne county, and no appeal has been taken from the order of the probate court. While we are not here concerned with the validity or invalidity of the Draper will, since it was introduced in evidence as tending to disprove the agreement of which plaintiff seeks specific performance, the circumstances surrounding the making of this will may properly be noted. At the time of its execution Draper was approximately 75 years of age. Vivian Garrett, whom Draper made his sole beneficiary, was about 25 years of age, so far as disclosed by the record in no way related to him, and said to have been a social worker. On the afternoon of the day the will was made Vivian Garrett, together with her mother and step-father, took Draper for an automobile ride. This was about three months after Draper’s wife had died. There is testimony that at this stage in his life Draper was intemperate. The record discloses the will was prepared by a notary public about 2 o ’clock in the afternoon ; and at 4 o ’clock these people who had Draper in charge brought him home in a state of intoxication. There is testimony that he staggered and had the smell of liquor on his breath. According to some testimony, he was entirely sober when he left his home a few hours before. When Draper returned home, appellant’s mother, Mrs. Jackson, left with an occupant of the Draper house what remained of a bottle of whisky which, as shown by the testimony of the person with whom it was left, Mrs. Jackson had purchased. In passing- it may be noted that, notwithstanding appellant and her mother and step-father contradict much of the testimony just above referred to, still it may have had a material bearing with the trial judge in weighing other testimony given in behalf of appellant by herself and her parents.
Our review of this record satisfies us that the testimony was ample to sustain the trial judge who found that Draper entered into the alleged oral agreement, with plaintiff, that plaintiff performed his part of the agreement, and that he was entitled to a decree of specific performance. The instant case falls within our holdings in Bassett v. American Baptist Publication Society, 215 Mich. 126 (15 A. L. R. 213); Outland v. Outland, 237 Mich. 122; Puddy v. Sharpe, 248 Mich. 147; Mayes v. Central Trust Co., 284 Mich. 504. The decree entered in the circuit court is affirmed, with costs to appellee.
Btjtzel, C. J., and Wiest, Btjshnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. | [
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Sharpe, J.
This is a petition for mandamus filed by certain members of the police department of the city of Hamtramck to compel payment of salaries claimed to have been unlawfully withheld. The material facts are not in dispute.
Petitioners are members of the Hamtramck police department and had been prior to July 1, 1931. Salaries of members of the police department had been raised during previous years. In June, 1931, the common council of the city of Hamtramck adopted and passed a budget of appropriations for the fiscal year of 1931 and 1932 in which budget the sum of $274,515 was allowed for the police department and $81,810 for the welfare department. By November, 1931, because of the economic conditions, the welfare department had spent $134,285.72. In order to meet this financial crisis the city attempted to sell $275,000 of emergency bonds. Bond buyers agreed to buy these bonds on condition that the city cut its monthly expenditure in all departments except the welfare department. The result of this economy measure meant that the salaries of policemen were to be cut 25 per cent, or a reduction in the force to meet the conditions named by the bond buyers. In the spring of 1932, the city of Hamtramck contemplated the borrowing of about $400,000 in anticipation of the collection of the next year’s taxes in order to meet the expenses, but before the banks would loan this amount, they insisted that other economies be effected in all departments.
In compliance with this latest economy measure, a scheme was evolved whereby the personnel of the police department would remain the same, but with the understanding that each officer would work nine and a half months during the year. The result of this meant a further reduction in salaries of 15 per cent.
With the beginning of the fiscal year of 1933, the pay of members of the police department was increased until 1936 when it was 95 per cent, of what it had been before salaries had been reduced. In 1936, petitioners filed claims with the common council for the amount that had been deducted during the fiscal year 1931-1932. These claims were not allowed, whereupon petitioners petitioned the circuit court for a writ of mandamus. The cause came on for trial and on May 3, 1937, the trial court entered an order denying the petition for mandamus.
Petitioners appeal and contend that they are “public officers” or “public officials” and as such are protected by the Constitution and statute against salary reductions during term of office; that any charter provision purporting to authorize police force salary change during budget periods violates the Constitution and home rule act and is therefore void; that the attempted salary reduction made in November, 1931, was accomplished by illegal methods; and that the second budget reduction of 15 per cent, did not affect such petitioners as did not take a “lay off.”
Article 16, § 3, of the Constitution of 1908 provides that “salaries of public officers, except circuit judges, shall not be increased, nor shall the salary of any public officer be decreased, after election or appointment.” Act No. 279, § 5, Pub. Acts 1909, as amended (1 Comp. Laws 1929, § 2241 [Stat. Ann. § 5.2084]) also known as the home rule act, provides that no city shall have power ‘ ‘ to change the salary or emoluments of any public official after his election or appointment or during his term of office.”
In our construction of the Constitution and home rule act we held in Burton v. City of Detroit, 190 Mich. 195, that the inhibition against the raising or lowering of salaries applies only to the definite and not to the indefinite term of an official.
In Bodell v. City of Battle Creek, 270 Mich. 445, we said:
“One of the reasons for the rule that an official’s salary cannot be reduced during his definite term is to prevent the use of an indirect method to discharge an official during such term by the subterfuge of reducing his salary.”
In Gillespie v. Oakland County Board of Auditors, 267 Mich. 483, we said:
“All public officials are within the inhibition against decrease of salary during term of office. The mandate applies to all public officers having fixed terms and all salary-fixing bodies.”
See, also, Holland v. Adams, 269 Mich. 371.
Having determined that a fixed tenure or definite term is necessary to invoke the constitutional inhibition, we now consider the tenure of petitioners as members of the police department of the city of Hamtramck.
The Constitution of Michigan gives the legislature authority to enact general laws for the incorporation of cities.
“The legislature shall provide by a general law for the incorporation of cities.” Const. 1908, art. 8, §20.
“Under such general laws, the electors of each city * * * shall have power and authority to frame, adopt and amend its charter * * * and, through its regularly constituted authority, to pass all laws and ordinances relating to its municipal concerns, subject to the Constitution and general laws of this State.” Const. 1908, art. 8, § 21.
The charter of the city of Hamtramck provides:
“The council shall maintain a police force for the protection of the persons and property of the inhabitants. ’ ’ Chap. 11, § 1.
‘ ‘ The director of public safety * * * shall * * * appoint * * * such number of police officers, patrolmen and other officers and members of the police department as the council shall by ordinance or resolution direct. ’ ’ Chap. 11, § 2.
“The director of public safety shall appoint * * * a chief of police and a chief of the fire department who shall be responsible to him for the conduct of their respective departments, and who may be removed without assigning cause, by the director of public safety at any time, but no other officers, policemen, firemen or person employed upon the police signal and fire alarm systems shall be removed, discharged or demoted, excepting only upon charges preferred and proven, after due notice of hearing, before the city council of the city of Hamtramck.” Chap. 9, § 19.
Under the above charter provisions policemen are appointed and hold such positions “during good behavior. ’ ’ In Lowrie v. Brennan, 283 Mich. 63, we had under consideration the construction of 3 Comp. Laws 1929, § 17380, as amended by Act No. 308, Pub. Acts 1931 (Comp. Laws Supp. 1935, § 17380, Stat. Ann. §28.1140). We there held that the effect of this section was to create a tenure of office during good conduct and not for a definite period.
It is our conclusion that policemen holding office * ‘ during good behavior ’ ’ have an indefinite term and are not affected by the constitutional inhibition. In view of this holding, it follows that section 19 of chapter 9 of the charter of the city of Hamtramck, which provides “the compensation of the chief of police and fire departments, as well as those employed in the police signal and fire alarm departments, and all other officers, firemen, policemen and persons employed in said departments, shall be fixed and determined from time to time by the city council, which shall have the power and authority to change, at any time, such compensation in any manner as it shall deem necessary,” gives the council the power and authority to increase or decrease the salary of policemen at will.
The order of the lower court denying-plaintiffs’ petition for writ of mandamus is affirmed. No costs will be allowed as a public question is involved.
Wiest, Potter, Chandler and McAllister, JJ., concurred with Sharpe, J. | [
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Bushnell, J.
This is an appeal from a judgment entered upon the verdict of a jury in a libel action, based upon the publication of a newspaper article quoted in part in our former opinion in this cause. See Bowerman v. Detroit Free Press, 279 Mich. 480. On the first trial the jury awarded plaintiff substantial damages against defendant Detroit Free Press and nominal damages against defendant Roy Stiles, who was in charge in the city of Lapeer of the circulation of defendant’s newspaper. The judgment in the first case was reversed and the cause was remanded for a new trial. The action was ag*ain tried upon the same pleadings and judgment was again entered for plaintiff against both defendants in the sum of $1,500.
Defendants took the position at the second trial that the publication of the claimed libelous language was qualifiedly privileged. Privilege to report judicial proceedings applies only to a correct report of such proceedings. Sweet v. Post Publishing Co., 215 Mass. 450 (102 N. E. 660, 47 L. R. A. [N. 8.] 240, Ann. Cas. 1914 D, 533); Post Publishing Co. v. Moloney, 50 Ohio St. 71 (33 N. E. 921); Ballinger v. Democrat Co., 203 Iowa, 1095 (212 N. W. 557); Times-Dispatch Publishing Co., Inc., v. Zoll, 148 Va. 850 (139 S. E. 505); Mannix v. Portland Telegram, 144 Ore. 172 (23 Pac. [2d] 138, 90 A. L. R. 55) (dictum) ; Shiell v. Metropolis Co., 102 Fla. 794 (136 South. 537) (dictum); Newell, Slander & Libel (4th Ed.), § 456, p. 498; Odgers on Libel & Slander (6th Ed.), p. 259; 1 Cooley, Law of Torts (3d Ed.), p. 445. See, also, Bathrick v. Detroit Post & Tribune Co., 50 Mich. 629 (45 Am. Rep. 63). This is true even though the inaccuracy in the publication is unintentional and the result of a mistake. Ballinger v. Democrat Co., supra, and Sweet v. Post Publishing Co., supra. The fact that the inaccuracy contained in the publication is the result of an honest mistake may possibly be shown by the defendant in mitigation of damages, but the honesty of the mistake does not justify the defamation. Appellants cite Miner v. Detroit Post & Tribune Co., 49 Mich. 358, in support of their claim of qualified privilege. In the Miner Case the defendant’s defamatory publication included, perhaps, an incorrect report of a judicial proceeding, but the publication was justified by the court not on the ground that the report was privileged as such but rather that the subject-matter of the defamatory statement was of public interest and the statement was, therefore, qualifiedly privileged. There is no claim in the instant case that a public interest is involved.
Appellants argue that the “occasion and not the language employed determine the privilege,” citing Fortney v. Stephan, 237 Mich. 603, among others. This rule means no more than that we must look to the extrinsic situation and not to the actual words used in order to determine whether the defamation is privileged. The extrinsic circumstances in the instant case are that defendant’s newspaper was reporting a judicial proceeding which created a qualified privilege. But, having determined this, an additional step must be taken, namely, the ascertainment of the scope of this privilege. The authorities, supra, hold that such privilege does not justify inaccuracies in the published report. The libelous statement must have been in fact made in the judicial proceeding in order that its publication fall within this privilege.
The claimed libel in the instant case was not authorized by the language of Act No. 279, Pub. Acts 1931, amending 3 Comp. Laws 1929, §14469 (Stat. Arm. § 27.1369), because the proviso of this section excludes “a libel contained in any matter added by any person concerned in tbe publication; or in tbe report of anything said or done at the time and place of the public and official proceeding which was not a part thereof. ’ ’ Since this publication was also not privileged at common law, it is not necessary to consider on this appeal the question raised by appellants as to whether the statute treats of a qualified or absolute privilege.
On the former trial plaintiff’s attorney made the following statement:
“Mr. DesJardins: I say for the record, Mr. Stiles was included simply because he was the local distributor of the paper and delivered the Free Press in this town. So far as Mr. Stiles is concerned, we propose only to ask the jury for six cents damages. ’ ’
The trial judge charged the jury accordingly. In Bowerman v. Detroit Free Press, supra, we held that defendant publisher was thereby denied a fair and impartial trial.
At the second trial defendant Stiles offered in evidence portions of the transcript of the former proceedings which included a part of the cross-examination of plaintiff and the foregoing statement of her counsel. The trial judge refused to permit the transcript to be read to the jury. Appellants now argue that this statement was not only admissible as evidence but that it was binding upon plaintiff as a judicial admission. Neither theory is sound. Plaintiff’s attorney did not state as a fact that no damage had been suffered by plaintiff as a result of defendant Stiles ’ participation in the publication of the libel; he merely relinquished, for the purposes of the first trial, the right to any more than nominal damages against Stiles.
“Judicial admissions made in one trial, in order to be binding upon a second trial, must have been intelligently made as a fact, and not merely to expedite the particular proceeding.” Mitchell v. Reolds Farms Co., 268 Mich. 301, 307.
The statement did not admit any material evidential fact on the question of damages but was apparently merely procedural strategy. The remarks in Kruk v. Railway Co., 249 Mich. 685, are applicable:
“Upon a new trial, a case is tried as if it had not been tried before and without prejudice to either party. * * * "When a new trial was ordered, the parties started out from their pleadings.”
In excluding the proffered evidence the trial court was not permitting plaintiff to take a position inconsistent with that assumed by her on the first trial. Her theory of recovery was the same in both.
Assuming that estoppel might otherwise exist, appellants are not in a position to assert the same now because they did not rely upon plaintiff’s counsel’s statement at the first trial. On the contrary, they claimed that reversible error was committed by the making of the statement and successfully appealed from the judgment rendered.
“In order to work an estoppel, the position assumed in the former trial must have been successfully maintained.” Kruk v. Railway Co., supra.
See, also, Gott v. Judge of Superior Court of Detroit, 42 Mich. 625, and Shippy v. Village of Au Sable, 85 Mich. 280.
This court, on its own motion, requested counsel to brief the following question:
Can defendant Stiles, a local distributor in La-peer of defendant Detroit Free Press, be required to respond in damages as a joint tortfeasor for the circulation of an alleged libel in the absence of proof of his knowledge of the libel?
Plaintiff says this question must be answered in the affirmative because of our former decision in this case. See Bowerman v. Detroit Free Press, supra.
Defendants, citing 17 R. C. L. p. 386 and 37 C. J. p. 15, say that, in the absence of a showing of want of knowledge by the distributor that the newspaper contained libelous matter, he must be held equally liable with the publisher.
In Street v. Johnson, 80 Wis. 455 (50 N. W. 395, 14 L. R. A. 203, 27 Am. St. Rep. 42), it is said:
“The authorities are to the effect that the mere seller of newspapers is not liable for selling and delivering a newspaper containing a libel upon the plaintiff if he can prove upon the trial to the satisfaction of the jury that he did not know that the paper contained a libel; that his ignorance was not due to any negligence on his part; and that he did not know, and had no ground for supposing, that the paper was likely to contain libelous matter. Emmens v. Pottle, L. R. 16 Q. B. Div. 354 (53 L. T. 808, 55 L. J. Q. B. 51); Regina v. Judd, 37 Week. Rep. 143; Chubb v. Flannagan, 6 Car. & P. 431 (172 Eng. Rep. 1307); Smith v. Ashley, 11 Met. (52 Mass.) 367 (45 Am. Dec. 216).”
See, also, Staub v. Van Benthuysen, 36 La. Ann. 467.
Stiles testified that he was in the confectionery and newspaper business and the agent in Lapeer for defendant Free Press and another newspaper. He supervised the distribution of newspapers by local carriers, collected for their sale, and remitted to the publishers. He said:
“I didn’t really read the article,- exhibit A, until after the sheriff served the paper on me. When the sheriff gave me the paper was the first time the article itself was actually called to my attention.”
On cross-examination he stated:
“I have been the agent for The Detroit Free Press 23 years. I never look at the papers first to see what they put in it. I let them take that responsibility. ’ ’
The question we are now discussing was not raised in the former case. We there stated the general rule that all persons who cause or participate in the publication of libelous or slanderous matter are responsible for such publication, et cetera, citing 37 C. J. p. 12, 17 E. C. L. p. 429; Grinnell v. Cable-Nelson Piano Co., 169 Mich. 183, and other authorities. We also said that “all actively connected with and engaged in the publication of a libel are responsible for the results,” citing Johnson v. Gerasimos, 247 Mich. 248, 252.
Stiles’ sole connection with the affair was to see that the newspapers were distributed in Lapeer after their arrival from Detroit. The rule applying to such a situation is found in 37 C. J. p. 15, where it is said:
“It is a good defense for a vendor or distributor of a newspaper or periodical to show that he had no knowledge of the libelous matter and that there Avere no extraneous facts which should have put him on his guard. But such vendor or distributor is liable if he had knowledge that the newspaper contained libelous matter.”
If defendant Stiles had an active part in the publication óf a libel with knowledge of its nature, he should respond in damages. In these days of speedy dissemination of news it seems unreasonable to hold that a local distributor of newspapers should be required to check the contents of each issue for libelous matter in order to protect himself against liability for damages.
Under the circumstances in this case the judgment against defendant Stiles cannot be sustained.
He was a proper party defendant in an action commenced in the county where he resided, 3 Comp. Laws 1929, § 13997, as amended by Act No. 255, Pub. Acts 1931 (Stat. Ann. § 27.641); his liability, however, was a matter for determination after a consideration of the facts and law. It is proper to include as defendants all “who may be severally, or jointly and severally liable, and to proceed to judgment and execution according to the liability of the parties.” 3 Comp. Laws 1929, § 14023 (Stat. Ann. § 27.667).
“In any action against two or more defendants, judgment may be rendered for the plaintiff against some one or more of the defendants.” 3 Comp. Laws 1929, §14517 (Stat. Ann. §27.1443).
Jurisdiction over the remaining defendant is not lost by reason of the reversal of the judgment as to Stiles. Fisher v. Rumler, 239 Mich. 224.
The judgment is vacated as to defendant Stiles and affirmed as to defendant Detroit Free Press. Costs to appellee as against defendant Detroit Free Press, but with no costs to or against defendant Stiles.
Butzel, C. J., and Wiest, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred. | [
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Bushnell, J.
Defendant Good was convicted of a violation of the homicide statute, the same being-section 324 of the Michigan penal code, Act No. 328, Pub. Acts 1931 (Stat. Ann. §28.556). This statute reads:
“Any person who, by the operation of any vehicle at an immoderate rate of speed or in a careless, reckless or negligent manner, but not wilfully or wantonly, shall cause the death of another, shall be guilty of a felony, punishable by imprisonment in the State prison not more than five years or by a fine of not more than two thousand five hundred dollars. ’ ’
Appellant’s statement of facts is accepted by the people. At about 11:30 p.m., Good, who was employed as a night watchman, on his way to work, was driving north on Mt. Elliot avenue in the city of Detroit. He drove up behind a street car, which was waiting- for a stop light, two blocks south of Farnsworth. "When the signal changed, Good drove alongside the car as it started up and passed it. About half a block south of Farnsworth avenue, Good observed an automobile parked at the curb; he turned to the left to avoid it and drove through an unprotected safety zone, which was merely outlined on the pavement, striking- Mrs. MacKenzie, who was standing- therein with her 17-year old daughter. Mrs. MacKenzie’s body was thrown ahead of Good’s car and she died about au hour later in the Receiving’ Hospital. Good’s lights and brakes, according to his testimony, were working well, and his windshield was clean. He was 52 years old, had been continuously employed at the same place of business for the last 13 years, except when it was shut down, and was a man of good character. After Good’s conviction by the jury, the court ordered that he be placed upon probation for a term of five years under the following conditions:
“1. That said defendant shall not operate a motor vehicle.
“2. That said defendant shall make restitution in the sum of $385 payable as determined by the probation department, and any further sum later imposed by the court.
“3. That said defendant shall be committed to the Detroit house of correction and therein confined for a term of three months. It is hereby ordered by the court, that said term be suspended until the terms of probation are violated.”
Two questions are raised in this appeal:
Appellant Good complains of the following instruction:
“If you find from the evidence in this case that this deceased person was standing in the highway and that the defendant drove his automobile against her, and that the reason he did drive his automobile against her was that he didn’t see her, then I charge you that he is guilty of the negligence which it is necessary for the people to prove in this case.”
The night on which the accident occurred was quite dark, the safety zone in which Mrs. Mackenzie and her daughter were standing was poorly lighted and Mrs. MacKenzie’s clothing was dark and blended in with the surroundings. Appellant claims that, because of these circumstances, the jury should have been free to determine whether or not his failure to see Mrs. MacKenzie constituted negligence and that the court erred, therefore, in charging in effect that such failure was negligence as a matter of law.
We do not find any error in this charge. An automobile driver, whose view is not obstructed, is bound to see pedestrians who come within the range of his lights. See Lett v. Summerfield & Hecht, 239 Mich. 699; Haney v. Troost, 242 Mich. 693, and Russell v. Szcsawinski, 268 Mich. 112. These cases, it is true, involved collisions with large objects, such as trucks and other automobiles, but the same principle is applicable to the present situation where a pedestrian is involved. We are not unaware of the cases in which this court has held that failure to see unusual objects whose presence may not be anticipated, despite the exercise of due care, is not negligence as a matter of law. Martin v. J. A. Mercier Co., 255 Mich. 587 (78 A. L. R. 520) (hole in road); Marek v. City of Alpena, 258 Mich. 637 (bump in road); Garrison v. City of Detroit, 270 Mich. 237 (unlighted abandoned traffic signal), and Bard v. Baker, 283 Mich. 337 (unlawful overhanging load on truck). However, autoists are bound to anticipate that pedestrians may be present on the street.
While the court’s charge left very little for the jury to determine with respect to defendant’s negligence, the language of the charge, taken as a whole, is within the law of this State. People v. Dougherty, 232 Mich. 46.
The order conditioning probation partly on restitution was presumably entered under the authority of 3 Comp. Laws 1929, § 17373, as amended by Act No. 308, Pub. Acts 1931 (Stat. Ann. § 28.1133), which provides in part:
“The court may impose such other lawful conditions of probation, including restitution in whole or in part to the person or persons injured or defrauded, as the circumstances of the case may require or warrant, or as in its judgment may be meet and proper.”
Appellant claims that this provision violates the due process clause of both Federal and State Constitutions, in that it does not provide for a hearing on the question of damages to be assessed, nor does it give a defendant an opportunity to interpose the defenses, such as the contributory negligence of a decedent, which are available to him in civil proceedings ; also that the notice of a criminal prosecution is “not appropriate to a proceeding in which civil damages may be assessed.”
The arguments of appellant are based upon the erroneous assumption that damages are “assessed” by the court when restitution is made a condition of probation. Such is not the case. No judgment is rendered for, nor could a writ of execution issue to enforce the collection of, the sum specified. A defendant in such instance is merely given the alternative of abiding by the conditions imposed or else suffering the imposition and execution of a sentence which ordinarily follows a verdict of guilty. This defendant was not deprived of any of his rights without due process; rather he was given the additional privilege of avoiding the usual penalty of his crime by the payment of a sum of money and the observance of the other conditions attached to his probation. Consequently it was not a deprivation of due process of law to deny defendant a hearing on the question of the amount of “damages” to be imposed as a condition, of probation and the statute, section 17373, is ample notice of the possibility that such a condition might be imposed.
Probation is not a matter of right but rests in the sound discretion of the court. People v. Dudley. 173 Mich. 389. No claim is made that the trial court abused its discretion.
Subsequent to the oral argument, we requested counsel to submit briefs on the question of whether the order of the recorder’s court, quoted supra, is valid.
The order provides that the defendant “shall be committed to the Detroit House of Correction and therein confined for a term of three months, ’ ’ which sentence is thereupon suspended “until the terms of probation are violated.” We have been unable to find any authorization for such an order by the trial court. On the contrary, the provisions of the act relative to probation contemplate that imposition and execution of sentence shall await disposition of the matter of probation. 3 Comp. Laws 1929, § 17374 (Stat. Ann. § 28.1134), provides the procedure for revocation of the probation order and then declares:
“In case such probation order is terminated and revoked, the court may proceed to sentence such probationer in the manner and to the same penalty as it might have done if such probation order had never been made.”
Section 17375, 3 Comp. Laws 1929 (Stat. Ann. § 28.1135), provides that upon termination of the probation period—
“The court may thereupon discharge the probationer from further supervision and enter judgment of suspended sentence, or extend the probation period, as the circumstances may require,”
The order is invalid because not in accordance with the statute.
The provision in 3 Comp. Laws 1929, § 17373, as amended by Act No. 308, Pub. Acts 1931 (Stat. Ann. §28.1133), that as “a condition of probation, the court may require the probationer to be immediately imprisoned in the county jail for not more than sixty days,” has no bearing on the validity of the order. The suspended sentence imposed in the instant case was not an immediate imprisonment as a condition of probation, but rather purported to be a final sentence. It should also be noted that this section permits incarceration as a condition of probation for a maximum period of 60 days, whereas in the present case a 90-day period was stated.
The order is invalid also because it permits the probation department to determine how restitution of the $385 shall be made by defendant. Section 17373, as amended, permits the court to impose the conditions of probation including restitution, et cetera, and contains no authorization for a delegation of this duty, in whole or in part, to the probation department. The probation department may act in this matter in, at most, an advisory capacity.
The court should in any event include within its order the specific purpose, terms and conditions of the payment of money by a defendant if such payment is made a condition of probation. This record is silent in this respect and, therefore, we are unable to say whether the payment ordered was or was not a proper condition of probation.
The order of the trial court is set aside and respondent is remanded for, the entry of a correct order of probation or sentence.
Btttzel, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred with Bushnell, J. | [
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Bushnell, J.
This action arose out of an automobile collision on highway M-43, a short distance west of the city of Hastings, on the afternoon of April 3, 1936. This was a “nice clear day,” although there were some icy spots on the paved portion of the highway. Plaintiff, Doris Haney, was riding with her husband in the rear seat of a car driven by William McKibbin. The parties had been over this same road on their way to Hastings that day and the accident occurred as they were returning home. McKibbin, who was driving’ westerly, observed a horse-drawn wagon traveling’ in the same direction some distance ahead. As he approached the wagon, he slowed down until he was within 15 or 20 feet when he applied his brakes. At this moment his car struck a patch of ice and skidded across the center line of the highway. McKibbin then observed defendant Beisel’s car approaching from the west and, in his attempt to avoid a collision, McKibbin increased his speed, turned off the pavement on the wrong side of the road and continued in the same direction on the unpaved southerly shoulder of the highway. Beisel, instead of continuing on the pavement in an easterly direction, turned to his right and onto the south shoulder of the road. The McKibbin and Beisel cars collided as each of them was turning back to the highway and Mrs. Haney was badly injured.
At the close of plaintiff’s case defendant asked the court to direct a verdict in his favor, on which motion decision was reserved. The cause was submitted to the jury, which returned a verdict for plaintiff in the sum of $2,000. Defendant then moved for the entry of a judgment notwithstanding the verdict, which motion was granted. Plaintiff appeals.
The trial judge expressed doubt as to the negligence of the defendant but assumed its existence for the purpose of the motion and held that plaintiff’s driver was guilty of contributory negligence as a matter of law, such negligence being imputed to the plaintiff.
Plaintiff urges that Ulvund v. Sogge, 266 Mich. 548, is controlling and that the trial court was in error in distinguishing this authority. In that case plaintiff’s car was approaching from the west near a country store, which was located on the north side of the highway. Before reaching the store the driver signaled with his lights and turned northeasterly towards the store, gradually slackening his speed. The collision occurred on the unpaved north portion of the highway, which the court said was a place of safety reached by the plaintiff, where he had a right to be. In the Ulvund Case plaintiff’s driver was not attempting to pass a moving vehicle, as was McKibbin. Despite his claim that he intended to turn into a farm driveway, there is nothing in the facts to indicate that McKibbin was in a place of safety where he had the right to be when the collision occurred.
The facts in the instant case are more like those in Johnson v. Fremont Canning Co., 270 Mich. 524, where Johnson’s wife, who was driving, observed a stalled truck and trailer partly on and partly off the highway. When Mrs. Johnson put on her brakes, she struck an icy spot in the road and skidded into the trailer. It was held that she was guilty of contributory negligence in not being able to stop within an assured clear distance. See 1 Comp. Laws 1929, § 4697, as amended by Act No. 119, Pub. Acts 1933 (Stat. Ann. § 9.1565).
In Leonard v. Hey, 269 Mich. 491 (37 N. C. C. A. 111), the court said:
“It is fundamental law that the driver of a car must keep on the right side of a street or highway, but failure to keep to the right when, through no fault of the driver, an automobile skids on a slippery pavement and is thus thrown across the road, has been held to excuse failure to comply with the statute. ’ ’
See citations therein.
But the court also said:
“If such skidding results from the negligent acts or commissions of a driver, he is not absolved from the consequences of breach of the rule although it is not deliberate or intentional.”
Under some circumstances, such as those disclosed in Bowman v. Struble, 276 Mich. 311, and Eskovitz v. Berger, 276 Mich. 536, the question of plaintiff’s driver’s negligence is one for determination by the trier of the facts. However, one who finds himself on the wrong side of the road or drives down the wrong side of the road must use greater care and must assume the risk of his experiment. See Winckowski v. Dodge, 183 Mich. 303; Lawrence v. Bartling & Dull Co., 255 Mich. 580; Harrison v. Eastern Michigan Motor Bus Co., 257 Mich. 329, and Paton v. Stealy, 272 Mich. 57.
We do not judge plaintiff’s driver’s action in an emergency from a retrospective point of view. Paton v. Stealy, sttpra, and DeForest v. Soules, 278 Mich. 557. However, plaintiff’s claim that her driver was acting in an emergency is too broad. McKibbin testified that he slowed down to about 15 to 20 miles per hour as he approached the wagon and, when he found that his brakes did not hold after he struck the icy spot on the pavement, he accelerated to 30 or 35 miles per hour. He said he traveled from 60 to 65 feet from the time he crossed the center line of the pavement until he reached the point of impact. The emergent nature of the situation had passed before he reached the place of collision. McKibbin apparently had full control of his car and he must be charged with having deliberately assumed the burden of his decision that it was proper for him to continue at an increased speed on the wrong side of the road. Under the circumstances disclosed by this record, the trial court was correct in holding that plaintiff’s driver was guilty of contributory negligence which, being imputed to plaintiff, precludes any recovery on her part.
The judgment non obstante veredicto is affirmed, with costs to appellee.
Wiest, C. J., and Butzel, Sharpe, Potter, Chandler, North, and McAllister, JJ., concurred.
1 Comp. Laws 1929, §4703 (Stat. Ann. §9.1571). — Reporter. | [
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North, J.
Plaintiff, who for 18 years was employed as a miner by defendant, claims that in May, 1934, he suffered an accidental injury arising out of and in the course of his employment. In July, 1937, he made claim for compensation, and on hearing before the department he was awarded compensation for total disability at the rate of $18 per week. Defendant has appealed and asserts the following in its defense; (1) that plaintiff did not suffer an accidental injury arising out of and in the course of his employment, (2) that defendant did not have notice or knowledge of the injury within three months of the alleged happening, (3) that claim for compensation was not made within the statutory period of three months or within the statutory limitation of two years, and (4) that plaintiff’s disability is not due to the alleged accident.
According to plaintiff’s claim he and John Lehto were working at the task of enlarging for a ladder-way an opening which was about 3% by 3% feet extending from a sublevel upwards about 25 feet to the tenth level of the mine. He testified that while he was so working ‘ ‘ all at once water rushed out on ns so we got wet,” and that this water came: “From the old level. Cave-ins from the tenth level. ’ ’ When asked on cross-examination if some water was dripping all the time, plaintiff answered: “Some water was dripping. * * * It was pretty fair. * * * Some drops coming down.” Plaintiff claims that getting wet caused rheumatism, that he could not get out of bed the next day and he sent notice to the company’s doctor who attended plaintiff, that he remained in bed a couple of weeks and then “started walking around a little bit.” Plaintiff also testified that a couple of weeks after the alleged accident his superintendent called on plaintiff and he told the superintendent about getting wet. In July, 1934, plaintiff was given light work of operating a small electric motor, at which work plaintiff could sit or stand and thus favor his left leg which he claims was so affected with the rheumatism that he was not able to do the work of a miner, and that he has never been able to resume that occupation. He continued in defendant’s employ until the mine was closed in September, 1934. Plaintiff broke his left leg when he was seven years old and as a result was lame, but he did not use a cane in walking prior to the alleged accident, and for many years he had worked as a miner.
Under our view of this case a further recital of the accident and attendant circumstances is unnecessary, and we may assume for the purpose of decision that plaintiff did suffer an accidental injury arising out of and in the course of his employment with defendant. But, as noted above, it is urged as a defense that defendant had no notice nor knowledge within the statutory limitation of plaintiff’s having suffered an accident. There is ample testimony disclosing that plaintiff’s sickness and his inability to continue his work were promptly called to the attention of defendant. It is also clear from the record that defendant was aware of the fact that in the course of his work plaintiff on the day of the alleged accident got wet. But there is no dispute in the testimony, and even under plaintiff’s own testimony it is apparent that one working in the place where plaintiff was working was exposed to water dripping down through the opening from above. If plaintiff got wet in this manner it was a circumstance incident to his ordinary employment and did not constitute an accident. Careful examination of this record fails to disclose that the defendant or any of its officers or agents had any information whatever that plaintiff on the day of alleged accident got wet other than from having been exposed to the ordinary dripping of the water in the portion of the mine where he was then working. While the accident is said to have happened in May, 1934, plaintiff’s application for compensation was not made until July, 1937. In this application plaintiff makes the claim “he was drenched with water.” At the hearing before the deputy, plaintiff testified, “all at once the water rushed out on us so we got wet.” But so far as the record shows this is the first intimation that there was anything about plaintiff’s getting wet which was of an unusual, unexpected or fortuitous character. In other words it was the first hint that defendant had of plaintiff’s having sustained an accidental injury.
Because of plaintiff’s failure to offer any testimony tending to show that within the statutory period (2 Comp. Laws 1929, § 8431 [Stat. Ann. § 17.165]) defendant had any knowledge or notice of plaintiff’s having sustained an accidental injury, he did not establish his right to an award of compensation. The instant case is controlled by Gumtow v. Kalamazoo Motor Express, 266 Mich. 16; Littleton v. Railway Co., Inc., 276 Mich. 41; and Maki v. S. J. Groves & Sons, 279 Mich. 644. The award is vacated. Costs to appellant.
Butxel, C. J., and Wiest, Bushnell, Sharpe, Potter, Chandler, and McAllister, JJ., concurred. | [
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Chandler, J.
Petitioners and appellees sought in the circuit court a writ of mandamus requiring the respondent and appellant, a circuit court commissioner in and for the county of Jackson, to issue to them a writ of restitution of certain premises located in the city of Jackson, a judgment having been rendered by respondent finding defendants in said proceedings guilty of holding possession of the premises unlawfully and finding the amount due from defendants as vendees under a certain land contract to be the sum of $262.89. The writ was granted and respondent seeks review in this court by an appeal in the nature of certiorari.
The petitioners are the vendors in said land contract in which Hazel Burris Weadock, executrix of the estate of Jane C. Burris, deceased, Hazel Burris Weadock, individually, and Clare Burris Lippincott are named as vendees.
The vendees being in default in the payment of principal, interest and taxes, summary proceedings were commenced before respondent to repossess the premises involved by reason of such default.
The summons issued in said cause was returnable December 2,1937. On that day, it appeared from the return of the officer that defendant Clare Burris Lippincott could not be found, and that service had been made only upon defendant Hazel Burris Weadock, individually, and as executrix. On said date, an affidavit was filed with respondent showing that defendant Clare Burris Lippincott was not a resident of the State of Michigan, and an order was made directing that the appearance of said Clare Burris Lippincott be entered on or before December 27, 1937, to which date the cause was adjourned in order to comply with the statutory requirements relative to publishing of the order. On the date last mentioned, it appeared that the order theretofore issued had been duly published and a copy mailed by registered mail to the last known address of Clare Burris Lippincott. Neither of the defendants appeared, and a plea of not guilty was entered by respondent who proceeded to hear the proof offered by plaintiffs, after which he found defendants guilty of unlawfully withholding possession of the premises from plaintiffs; that the amount due from defendants to complainants in said action was $262.89, and entered a judgment for restitution and for costs taxed at the sum of $6.35. No appeal was taken from this judgment.
On March 26, 1938, the defendants appeared before the commissioner and deposited with him the sum of $197.99 to redeem the property and stay the writ of restitution, their attorney insisting that there was included in the amount found to be due by respondent the sum of $64.90, representing taxes due but which had not been paid by the vendors. On April 7, 1938, respondent added to his docket in the proceedings, the following “postscript:”
"On this date a hearing was had with Mrs. Thelma Spicer testifying and being questioned first by Mr. Denton. Mr. Blackman was present for the complainant. Mrs. Spicer stated that the summer tax for the year 1937 was unpaid at the time of transfer to the county department and that the amount was $66.26, that the date of transfer was March 15, 1938 and that there had been owing on December 27, 1937, the date of judgment in this case, the amount of $65.62. Both parties waived the right to have the witness testify under oath.
“On March 26,1938, John Denton, for the defendant had deposited $197.99 with me to redeem the property and stay a writ of execution. He claimed that the defendants were not liable for payment of the taxes inasmuch as the vendors had not paid same. It is my determination that this statement is a correct interpretation of the law and I had previously refused the writ on this ground. The record is corrected accordingly to read that the amount necessary to stay the writ is $197.99 instead of $262.89 as had been previously recorded. This sum excludes the amount of taxes stated to be due which is $64.90.”
On April 9, 1938, the petitioners by their attorney demanded of respondent the issuance of a writ of restitution, declining to accept the amount that had been deposited with him by defendants, the same being $64.90 less than the amount found due by respondent at the time of entry of judgment.
Respondent refused to issue the writ and the application for a writ of mandamus followed. In the court below he contended that his finding* of the amount due from defendants was erroneous because plaintiffs had not paid the taxes in the sum of $64.90 which were included in the amount found by him to be due at the time of entry of the judgment, and that the sum so found to be due was not part of the judgment and might be corrected by him at any time before the 90-day period for redemption expired. He further contended that the specific tax on the land contract had not been paid, and that said contract was not, therefore, properly in evidence. These were the only questions raised. The trial court found that respondent in the summary proceeding before him had determined that the plaintiffs therein were entitled to a writ of restitution of the premises, that he had made a finding that the amount due on the contract in question was $262.89, that after 90 days, within which under the statute * the defendants had the right to redeem by paying the amount stated, he placed upon his books what he termed a “postscript” changing the amount found to be due, and concluded, “It is my opinion that after the judgment was once docketed that was a final judgment, and if there was anything* erroneous in it, the defendants’ only remedy was to appeal from that judgment, which they did not do. Taking this view of the situation, the writ should issue.”
Respondent contends:
(1) That he is not collaterally attacking the validity of the judgment of restitution, but is claiming that because the specific tax was not paid upon the land contract there was not a valid finding of the amount due, and that said amount being no part of the judgment, the tender of $197.99 before the expiration of the period of redemption was sufficient to reinstate the contract;
(2) “That the appellant is not now claiming that the judgment entered by him for restitution of the premises is void, but is claiming that under all of the testimony legally admissible the land contract vendees have redeemed from the forfeiture by paying a sum within the statutory period, which, in the absence of any other legal proof, is sufficient payment to reinstate the contract;”
(3) That the issuance of a writ of mandamus by the lower court ordering the respondent to issue a writ of restitution works an injustice upon the defendants in the summary proceeding’ because they paid the amount due under the contract before the expiration of the period of redemption, there being no valid determination of any other amount due, and that this court has often stated that “mandamus is a discretionary writ and should not issue when it would work an injustice. ’ ’
We will discuss the points raised in the order stated:
(1) The contention that the contract was improperly admitted in evidence upon hearing in the summary proceeding is a collateral attack upon the judgment entered therein. If the contract was erroneously admitted in evidence by reason of the failure of plaintiffs to pay the specific tax provided by statute, defendants’ only remedy was by appeal. See Security Investment Co. v. Meister, 214 Mich. 337; Hafner v. A. J. Stuart Land Co., 246 Mich. 465.
The application for the writ of mandamus was made for the purpose of enforcing the judgment of the commissioner and not for the purpose of enforc ing the contract, and at the time respondent endeavored to correct what is termed his “erroneous finding’s” as to the amount due on the contract, not only the time for appeal had expired, but the time for redemption as well. Consequently the vendees are left without a remedy.
(2) When respondent sought to amend his judgment entry by adding thereto the so-called postscript, the time for redemption had expired, but even though such had not been the case, after the judgment had been entered and the entry thereof had been made on his docket and signed by him, he had no authority to make any alterations in such docket entry either by addition, deletion or change of name or figures. Foster v. Alden, 21 Mich. 507; Kluck v. Murphy, 115 Mich. 128.
(3) It is true, as contended by respondent, that “mandamus is a discretionary writ and should not issue when it would work an injustice.” It is also true that a circuit court commissioner has no equity jurisdiction. Puziol v. Kastle, 231 Mich. 100. In the instant case, when the commissioner entered a judgment of guilty of unlawful possession, it became his duty to make a finding of the amount that defendants were required to pay to stay the issuance of a writ of restitution, and having’ entered said judgment and finding upon his docket, it became a valid and subsisting*, judgment and finding until vacated or set aside by an appellate court or vacated by a court of equity because of fraud.
The order of the trial court is affirmed, on condition that the petitioners shall forthwith pay or cause to be paid to the county treasurer of the county of Jackson the amount of tax imposed on the land contract in question by 1 Comp. Laws 1929, § 3640 et seq. (Stat. Ann. § 7.421 et seq.), and exhibit to the trial court the certificate of the county treasurer showing the payment of said tax, or file with the clerk of the circuit court for the county of Jackson such certificate or a receipt showing payment of said tax. See Smith v. Sherman, 265 Mich. 590. The proceedings being taken against respondent as a public officer, no costs will be allowed.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, North, and McAllister, JJ., concurred.
See 3 Comp. Laws 1929, § 14988, as amended by-Act No. 122, Pub. Acts 1933 (Comp. Laws Supp. 1935, § 14988, Stat. Ann. § 27.1999).— Reporter. | [
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McAllister, J.
Plaintiff herein was defendant in a replevin suit in which judgment was entered against him on November 13, 1937 for return of property appraised at a value of more than $500. A motion for new trial was filed by plaintiff which was denied December 15,1937. Claim of appeal was filed December 28,1937. Prior thereto, on December 20th, plaintiff had ordered a transcript of the testimony from the court stenographer, and on January 17th, the 20th day after the filing of the claim of appeal, the said transcript, with the exception of certain testimony of a witness in another case which had been read into the record, was delivered to plaintiff’s counsel by the deputy county clerk, payment therefor having been duly made.
Plaintiff’s counsel, at the time he paid for, and secured the transcript of testimony, appeared in the courtroom of the circuit judge, for the purpose of securing an extension of time in which to settle the bill of exceptions. He had with him an affidavit to be signed by the court stenographer setting forth that the transcript had been ordered on or about December 20,1937 and that it had already been paid for and furnished. Counsel also had with him a proposed order extending the time in which to settle the bill of exceptions. On the day in question, the circuit judge was in another county trying eases, and the official court stenographer was absent from the office because of illness. Plaintiff’s counsel was thereupon advised by the deputy county clerk that if counsel would leave the affidavit with such officer, it would be executed by the court stenographer and the order for extension of time would be signed by the judge as of the day of its presentment. On the evening of the same day, which was the last day on which to secure an extension of time, the circuit judge returned to his office and signed the order which had been left by plaintiff’s counsel. The court order and the stenographer’s affidavit were typed upon the same sheet of paper.. The order set forth:
“In this cause, upon reading the above certificate, It is ordered that the above named defendant and appellant is allowed 40 days from January 17, 1938 to settle his bill of exceptions.”
It is not clear from the record whether the affidavit was signed by the court stenographer prior to the signature of the order by the court. The recital in the court’s order would indicate that it had been signed, as it refers to “the above certificate.” Whether or not it was signed and acknowledged, the jurat was not signed nor was it filed until the next day, January 18th. There is, however, no requirement that the certificate be filed. The court rule provides that the appellant “shall produce a certificate from the stenographer of the trial court.” Court Rule No. 66, § 2 (1933). Appellant would lose no rights, therefore, by neglecting to file the certificate, since producing it to the court fulfilled the requirements' of the rule. It was not necessary to present an affidavit, but only a certificate from the stenographer, and although such certificate was in form of an affidavit, which may not have been verified, such a variation would not be fatal to the right of a party to appeal.
On February 23, 1938, within the period allowed by such order for settlement of the bill of exceptions, it was noticed for settlement and thereafter adjourned by plaintiff herein to April 11, 1938, to which defendant herein filed objections to the settlement of the bill for the reason that the plaintiff had not secured a proper extension of time and that the court was without jurisdiction to make an order extending the time where the stenographer’s certificate was not executed and filed until more than 20 days from the date of filing claim of appeal. On the filing of such objections, the circuit court entered an order refusing settlement of the bill of exceptions and holding that because the stenographer’s certificate was not “signed and filed” until more than 20 days -after the filing of the claim of appeal, the court lost jurisdiction to extend the time.
Under the practice prior to the court rules of 1933, the court lost jurisdiction to settle a bill of exceptions after the 20-day period.
Under Court Rule No. 56 (1933), it is provided:
“Section 1. (a) Every appeal to the Supreme Court shall be deemed perfected on filing a claim of appeal with the court, tribunal or officer whose action is to be reviewed.
“(b) When the appeal is so perfected, the Supreme Court shall have jurisdiction of the case.
“(c) No appeal, so perfected, shall be dismissed except on stipulation, on special motion and notice, or by the Supreme Court on its own motion.”
In Hoffman v. Security Trust Company of Detroit, 256 Mich. 383, the court said:
“An appeal is perfected when notice of appeal is filed within the required time. Court Rules Nos. 56 and 57 (1931). Both the act and time of filing are jurisdictional. * * * The other acts necessary to complete an appeal are not jurisdictional. Court Rule No. 56 (1931). But they and the time for their performance are mandatory, in that they are requisites of an appeal and the acts may be performed after the prescribed time only on special leave of court and upon such just terms as it may impose.”
The circuit court had jurisdiction to enter an order to extend the time to settle the bill of exceptions, on motion after the expiration of the 20-day period, although special leave of court would have been required. The order which was rendered therefore was not a void order but was only voidable. A party must obey a voidable order or move to have it set aside. Until the order extending time was set aside, the court as well as the parties were bound by it. If such order had been set aside, plaintiff would be entitled to move for special leave of court for an extension of time, and presumably finder the circumstances such leave would have been granted by the court if it had acted in its discretion; but the court refused to sign the bill of exceptions upon objections which did not go to its contents, mistakenly assuming that he had lost jurisdiction. It was error, therefore, for the court to hold that he had no jurisdiction to enter an order extending time.
With such a standing order in effect, the plaintiff did not need to move for special leave, nor was he in a position to do so. No motion to set the order aside was ever made and the order is still in effect. It was erroneous, therefore, for the court to refuse to sign the bill of exceptions during the time in which the order extending time was in effect.
In his answer to plaintiff’s petition for a writ of mandamus, the respondent further stated that no certificate had been obtained from the trial court showing that the controversy involved more than $500 in accordance with Court Rule No. 60, § 1 (d) (1933). Plaintiff herein was defendant in a suit in which a judgment was recovered against him in replevin for property appraised at $613.08, except for a portion appraised at $102.12, for which judgment was rendered in favor of defendant. The requirement for leave to appeal, in so far as this case is concerned, applies only when there is a judgment of $500 or less, or a judgment is rendered for the defendant. In effect, the judgment was for plaintiff in replevin in an amount of more than $500 over and above defendant’s award. Under these circumstances, plaintiff was not required to secure a certificate from the trial court that the amount involved in the appeal exceeded $500.
The writ of mandamus to set aside,the order denying settlement of the bill of exceptions is granted, with costs to plaintiff, and the trial court is directed to sign a bill of exceptions on notice and settlement thereof.
Butzel, C. J., and Wiest, Bushnell, Sharpe, Potter, Chandler, and North, JJ., concurred. | [
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Sharpe, J.
This is a suit by plaintiffs for the dissolution of a joint venture, the sale of assets, an accounting and for a determination that the Sang Corporation has no interest in the Belcrest Apartments.
A phase of this controversy was before this Court in Kowal v.„ Sang, 312 Mich. 339. The property involved is located in Detroit, Michigan. • The factual background is as follows: About 1937 Rubin Kowal and his brother, Isadore Kowal, became interested in the Belcrest Apartments which was subject to mortgages aggregating more than a million dollars. The property eventually came under the control of the bankruptcy court. The Kowals desired to purchase the property from the trustee in bankruptcy. They formed a corporation known as Belcrest Apartments Company and entered into an agreement with the trustee in bankruptcy for the purchase of the same for $347,500. The Kowals had advanced the sum of $10,000 which, was deposited with the trustee. The payment of $347,500 was to be made by September 6, 1941. The Kowals sought a loan from an insurance company and when it became apparent that funds would not be available, they sought the services of attorney Blum, who informed them that he had a ■ client who would advance the required $347,500. An agreement was entered into with Bernard Sang, a copy of which reads as follows:
“Chicago, August 30, 1941.
“Bernard Sang, Esq.,
“Chicago, Illinois.
“Dear Sir:
“We make you the following proposal:
“You will deposit with the Abstract & Title Guaranty Company, of Detroit, Michigan, the sum of $347,500, to be paid out by the company in exchange for such deeds, releases, waivers and other instruments as will, in the opinion of the Abstract & Title Guaranty Company and of your counsel, Ilenry S. Blum, be sufficient to vest in you a good and merchantable title in fee simple to the premises described as follows: * * * (description of Belcrest apartments property).
“To make possible the vesting of title in you, we will contemporaneously with the deposit by you, either deposit or expend or have expended: (a) cash; (b) first mortgage bonds of the issue dated October 1, 1925, and recorded November 2, 1925, given by Max Hamburger and Laura Hamburger, his wife, to Melvin L. Straus, trustee; (c) /waivers or releases from holders of outstanding interest acquired for cash; (d) waivers or releases of person entitled to distribution or payment as a condition to the consummation of the deal, the aggregate of which shall represent a cash expenditure of not less than $67,500.
“Upon the acquisition by you of the real estate above referred to, you will cause to be organized a corporation with such capitalization as you shall elect, and with such classification of stock as you, in your sole discretion, shall direct, under the laws of the State of Michigan or the laws of such other State as you desire, and cause all of the stock of the corporation to be issued to you. The capital stock of the corporation so to be .organized is to be exchanged for the premises hereinabove set out and issued to you, or your nominee.
“Upon the organization of such corporation, you will cause to be issued two series of debentures, designated, respectively, by the letters ‘A’ and ‘B.’ There will be issued to you, or anyone you may designate, debenture or debentures A, which shall have priority in payment, both as to principal and interest, over debenture or debentures B, which shall be deliverable to us. Debenture A shall be retired out of the first funds coming into the possession of the corporation, whether by loan upon a mortgage, unsecured' loan, or otherwise. We expressly consent to the making by you, or by the corporation so to be organized, upon the security of the real estate any such loan or loans you may desire for the retirement of debenture or debentures A. Until the retirement of the debentures, they shall bear interest at the rate of 4% per cent., ‘but the interest on debenture B shall be payable only when and if earned. Debenture B shall at all times as to both principal and interest be subject and subordinate to any loans made or incurred either in the prosecution of the corporation’s business or for the retirement of debentures A.
“The corporation to be organized contemplates the making of a first mortgage loan upon the premises in question for such amount and on such terms as you, in your sole discretion, shall- approve, or which the duly elected directors of the corporation shall approve. It is also contemplated that a leasing for a term of years will be made on the afore said premises which shall he upon such terms and to such lessee as yon, in your sole discretion shall approve. Upon the making of the loan and the lease in question, and not before, there will be delivered to William J. Krugly % of the capital stock of the corporation less one share of stock.
“The undersigned acknowledge that they are advised you are acting on behalf of an undisclosed principal. 'We hereby expressly consent that no questions shall at any time be asked by ns or any complaint or action predicated upon anything done, caused to be done or any action withheld with respect to the form of the debentures, the form and classification of the stock, the amount thereof, the form of the loan or loans made by the corporation, either without security or upon the security of the property, the leasehold as to the lessee, the amount of the rents, the terms of the lease, the payment or withholding of dividends, or any other matter or thing relating to the subject matter of this letter, including therein your own wilful misconduct.
“The delivery to us of the debentures above referred to- and of the stock to be issued to William J. Krugly, above set out, is in full and complete payment and satisfaction of all our rights to the above premises or against you or any undisclosed principal represented by you.
“Your signature hereon will constitute your'acceptance of the foregoing.
“Rubin Kowal, (Seal)
“I. Kowal, (Seal)
“Accepted: Bernard Sang.”
The agreement required Sang’s principal to invest the sum of $347,500 to be used for the acquisition of the property and for the Kowals to invest the sum of $67,500 which included a cash deposit of $10,000 which accompanied their bid to the trustee in bankruptcy.
The agreement also provided that upon the acquisition of the property, a corporation was to be organized which would issue all of its capital stock to Sang in exchange for the property and that debentures would bé issued to Sang and the Kowals in the amounts of their respective investments with Sang’s debentures to have priority in payment over the Kowals’. It was also agreed that upon “the making of the loan and the lease in question * # * there will be delivered to William J. Krugly % of the capital stock of the corporation less one share of stock.”
In pursuance of the terms of the contract Sang paid the sum of $347,500 to the trustee in bankruptcy and acquired the title to the Belcrest apartment hotel. Later the Sang Corporation was incorporated and Sang transferred his title to the property to the corporation. Following the transfer of the property, Sang transferred 499 shares of stock to Krugly as agent of the Kowals and the remaining 501 shares to Sang’s principal. Debentures for $347,500 were issued to Sang’s principal and debentures for $67,500 were issued to the Kowals.
In March, 1942, the Kowals sought to have the contract set aside on the ground that it did not represent the understanding' and intention of. the parties; that it was intended to operate as a mortgage on the hotel to secure the payment of the $347,500; and that it. was void because it was usurious and against public policy. This case finally reached the Supreme Court. We there said:
“From the agreement in question and the evidence presented, we conclude that this money was advanced as an investment and not as a loan, and that a joint-venture relationship existed between the parties. * * *
“From the facts and circumstances shown by the record we are satisfied that the agreement in question represented the understanding and intention of the parties. We find no evidence indicating that the Kowals were induced by fraud, trickery or misrepresentation to sign the agreement. Under the facts and circumstances shown, we cannot say that it was usurious, unfair, inequitable, unconscionable or against public policy, as alleged.”
On October 30, 1945, plaintiffs filed a bill for partition in the circuit court of Wayne county. Oh December 6, 1945, they filed a supplemental bill of complaint in which the prayer for partition was abandoned and the following allegations made:
“These plaintiffs allege that under the determination of the Supreme Court they are co-owners in a joint adventure with either Henry Crown, or some other unknown individuals named herein as John Doe and Mary- Roe., (or, as will hereinafter be pointed out, Bernard Sang or Robert Crown,) and that the formation of the corporation hereinabove referred to as the Sang Corporation was merely a medium for carrying out the joint venture and that under the determination by the Supreme Court as aforesaid the purpose of the parties was to carry out a single' enterprise for profit and that the formation of the Sang Corporation, one of the defendants herein, was merely a convenient medium for the purpose of carrying into effect the acquisition of said property. ’ ’
Plaintiffs ask for the following relief:'
_ “2d. That this court determine with whom plaintiffs are in a joint venture and who the' John Doe and Mary Roe are;
_ “3d. That this court decree a dissolution of the joint venture and cause a sale of the assets thereof to be had in accordance with law;
“4th. That all the defendants come to an accounting with these plaintiffs in connection with their operation of the Belcrest Apartments;
“5th. That this court determine that the defendant, Sang Corporation, has no interest in said property but was merely formed as a convenient medium for carrying out a joint venture.”
Defendant Sang Corporation filed an answer to the amended bill of complaint in which it alleges:
“(a) The plaintiffs have no legal title to any of the capital stock issued by this corporate defendant.
“ (b) The said plaintiffs have no legal title to or in the real estate described in the bill of complaint.
“(c) The plaintiff Isadore Kowal has an interest in a debenture issued by this defendant, but nothing contained therein confers upon the holder of the said debenture any interest whatsoever in the real estate described in the supplemental bill of, complaint. * * *
“(e) The rights of the said plaintiffs are at all events controlled’ and limited by the said exhibit ‘ A’; by the terms thereof the said Kowals and their nominee, William J. Krugly, were not to acquire one-half (M>) of the capital stock of this corporate defendant, but on the contrary were to acquire one-half (%) of the said capital stock less one share, which capital stock was to be issued.in the name of the said William J. Krugly; the effect of the said agreement and the intention of the parties thereto was to vest the control of the said corporation in the undisclosed principal of the said Bernard Sang; and the said control was and is a substantial right which induced the making of the said agreement.”
The cause came on for trial and the trial court entered a decree ordering the dissolution of the joint venture and providing for a sale of the property. The decree was based upon the following statements in the court’s opinion:
“The evidence fails to disclose any definite time for the continuation of this joint venture except insofar as it may be surmised that it is to continue until Crown is repaid and until the Kowals were repaid. * * *
‘ ‘ This court finds that the only parties in interest in this joint adventure' are Isadore Kowal and Meyer Kowal, owning a one-half interest therein and Henry Crown, owning a one-half interest therein, that Bernard Sang and Robert Crown have no interest in said joint adventure of any nature or description whatsoever. * * *
“This cóurt further finds that the equitable owners of the Belcrest property are Isadore and Meyer Kowal owning a one-half interest therein and Henry Crown owning a one-half interest therein.
“This court further finds that the plaintiffs invested in said joint adventure $67,500 and that Henry Crown invested therein $347,500 and that the said Henry Crown is entitled to be reimbursed said' sum of $347,500 prior to the plaintiffs receiving payment of their $67,500, and balance remaining thereafter to be divided equally.
“This court further finds that an accounting should be had to determine what moneys have been received by the joint adventurers to'this enterprise.”
The Sang corporation appeals and urges that the rights of the parties are to be determined by the contract signed by the parties; that the contract does not provide for the acquisition of real estate to be held by the parties as tenants in common, oías joint tenants with the right of survivorship, but does provide for the investment of $347,500' and the acquisition of the property by one of the adventurers, its conveyance to a corporation to be organized by him, the issuance of all the capital stock to him, and its. subsequent distribution contingent upon the procurement of a mortgage loan and the execution of a lease upon the property; and that the agreement of the coadventnrers was _ to reach its final consummation upon the distribution of the corporation’s securities and, thereafter, these securities would be the fruits of the adventure.
Defendant Eobert Crown also appeals and urges that the trial court was in error in entering a decree in personam against Eobert Crown without personal service of process upon him; and that he has been deprived of his property without due process of law contrary to the provisions of the State' and Federal Constitutions.
Plaintiffs urge that the primary purpose of Henry Crown and the Kowals was to buy the Bélcrest Apartments in equal shares; that the corporate medium was used to give Crown control until he was repaid his money and thereafter each was to have equal interests; that Crown has practically been repaid his entire advance; and that the corporation had no function and was a mere passive agency and repository of the naked title of the coadventnrers.
The facts developed in this case are in harmony with those in the case reported in 312 Mich. 339. It is established that the $347,500 was advanced as an investment; and that the agreement in question represented the understanding and intention of the parties. This case involves an interpretation of the contract between the parties. In substance the agreement provides that the Belcrest Apartments was to be acquired by Bernard Sang; that Sang would organize a corporation and “cause all of the stock of the corporation to be issued to” himself; that after the corporation was organized two series of debentures would be issued, first in payment of the $347,500 and second in payment of the $67,500.; that Sang has the sole right to lease the premise's; that upon the making of the loan, and"the lease there would he delivered to William J. Krugly one-half of the capital stock less one share and “The delivery to us of.the debentures above referred to and of the stock to be issued to William J. Krugly, above set out, is in full and complete payment and satisfaction of all our rights to the above premises or against you or any undisclosed principal represented by you. ” '
It is well settled law that as between parties, a contract is essential to create the relation of joint adventure.
In 30 Am. Jur. pp. 691, 692, it is said:
“The rights of coadventurers or members of a syndicate, in property acquired or used in connection with the joint enterprise, depend primarily upon the agreement under which the parties are operating. The fact that the contract entitles a party to share in the profits arising from property does not necessarily make him a joint owner of the property itself.”
We are unable to find language in the contract which indicates that the parties to the contract intended that the real estate was to be held by the parties as tenants in common or as joint tenants with rights of survivorship. We think it clear that Sang’s principal was to he a majority stockholder in the corporation to be formed and that Krugly was to be a minority stockholder.
Nor can we find that the joint adventure was to extend beyond the time when the new corporation was formed and stock assigned to the interested parties. We have in mind that the Sang Corporation was not a party to the joint adventure agreement. It appears to us that one of the purposes of the joint adventure was to lodge control of the venture in a party other than the Kowals. Such purpose is fortified by the fact of the Kowals’ reputation as prolific litigants. The concluding paragraph in the agreement: “The delivery to us of the debentures above referred to and of the stock to be issued to William J. Krugly, above set out, is in full and complete payment and satisfaction of all our rights to the above premises or against you or any undisclosed principal represented by you” indicates to us that the joint venture came to an end when the parties received their stock in the new corporation. Plaintiffs have mistaken their remedy. Their rights áre such rights as minority stockholders have in a corporation. Because of our conclusions we do not find it necessary to discuss the claims made by the defendant Robert Crown. The trial court was in error in holding that plaintiffs are the equitable owners of a one-half interest in the property or that the Sang Corporation has no interest in the property.
A decree will be entered dismissing plaintiffs’ bill of complaint. Defendants may recover costs.
Caer,, C. J., and Btttzel, Btjshnell, Bowles, Reed, North, and Dethmers, JJ., concurred. | [
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North, J.
In this compensation case the employer has appealed from an award of compensation made to plaintiff, Joe Dyer. The factual background of this litigation, as disclosed by the record, is aptly stated in the opinion of the department as follows:
“The plaintiff, Joe Dyer, after a pre-employment physical examination, started working for the Chevrolet-Flint Division of General Motors Corporation on August 7, 1944. He was assigned to a burring job. Later he was transferred to work which consisted of polishing connecting rods. On February 13 [15], 1945 while polishing a rod, a broken knob on the machine used for polishing caused the rod to fly back, striking him in the left side of the abdomen. He immediately reported the accident to his foreman who sent him to the plant hospital. He described the accident to the doctor who attended him at the hospital. He was given a light treatment and returned to work. [Within an hour or two because of severe pain plaintiff returned to the plant hospital and was given a pass to go home.]
“About two weeks later plaintiff [having resumed work] returned to the hospital complaining of pain in the abdomen and was given a pass to go home. He remained at home in bed for about a week suffering from a rather severe pain in the area where he was struck. After he returned to work he went to the hospital nearly every day for treatment. Later, on the advice of the plant doctor, he was assigned to ■light work. He continued to experience pain in the -abdomen and was off work for approximately '■three tve'éks. When he returned to work he was placed on the wash rack which apparently was lighter work than he had previously done. He still complained of pain and was finally transferred to a drill press operation which admittedly is light work. Plaintiff’s employment was terminated November 8, 1945 by his employer for the reason that he had failed to pay his union dues. The employer’s contract with the union provides for a dismissal of employees who do not maintain their membership in the union by payment of dues. Since his discharge plaintiff haá only worked seven days during a two-weeks period as a carpenter’s helper up to. June 10, 1946. He' claims that he was not able to continue working because of the abdominal pain.
“Plaintiff had no symptoms prior to the accident. The symptoms developed immediately after the accident and have persisted since. Plaintiff was examined on various occasions by plant doctors and given infra-red treatment during the course of the time he worked after the accident. His work record following the accident shows that he lost considerable time. According to plaintiff’s testimony, the pain in the lower left quadrant was so bad that he had to take time off from work. The plant physicians were unable to find a definite cause for plaintiff’s complaints. At one time it was thought that he might have a hernia though apparently no diagnosis of a hernia was ever made. He was offered an • operation on July 18, 1945. The proposed surgery was in the nature of an exploratory operation. Plaintiff refused to submit to the operation, unless he was paid compensation benefits for the period of time he had lost up to July 18, 1945. Defendant refused to pay compensation benefits unless it could be determined from tbe operation that tbe accidental injury was the cause of whatever pathology, if any, was found.”
Appellant’s first contention is that there was no competent evidence to sustain the finding that plaintiff’s alleged disability is due to an injury sustained on February 15, 1945. This contention is without merit. Aside from other competent testimony pertinent to the above issue, Doctor Benjamin F. Freeman testified as to the results of a detailed examination made by him of plaintiff, which we quote in part:
“However, when the left abdominal wall was examined the patient complained of marked pain and tenderness and there was marked rigidity and spasticity of the muscles, and the patient immediately pulled away from the examiner’s hand when an attempt was made to examine this area. I could not detect any tumor masses in the abdominal wall or cavity, but the patient was so extremely tender and painful that a thorough examination was impossible because of this. # * *
“Q. What was your diagnosis, Dr. Freeman1?
“A. Injury to the left side of the abdominal wall with some internal disturbance to account for the marked rigidity, spasticity, pain and tenderness the patient has in the left abdominal wall, probably a peritoneal hemorrhage or hemorrhage into the wall of the intestines and abdomen.”
Following the above testimony a lengthy hypothetical question, embodying the facts appearing from the record, was propounded to Doctor Freeman, incident to which he was asked:
“State whether or not, Doctor, there could or might be a causal connection or relationship between the accident as described (being the accident of February 15, 1945) and the patient’s condition, Ms symptomatology and pathology which you found on the date of your examination?
“A. In my opinion there could be a causal relationship, sir. * * * TMs patient in my opinion is disabled from carrying on any type of work which would require heavy lifting, or work that would require him to be on his feet or sitting for any length of time, or that would require Mm to bend forwards or backwards. At the present time I do not believe that this patient is able to do a fair honest day’s work because of the pathological condition in his left abdominal wall and abdomen.
“Q. * * * In your opinion is he or is he not disabled in the general field of labor and industry?
“A. He is. * * * He might be able to do some light work, which he could perform while sitting, but certainly to do heavy manual labor is out as of the date of my examination. ’ ’
In the foregoing and other portions of the record there can be no question but there was competent evidence to present an issue of fact to the department as to plaintiff’s disability being due to the injury he,sustained on February 15, 1945.
Appellant also asserts that plaintiff’s refusal of defendant^ offer of surgery madé on July 18, 1945, was not reasonable and should bar his' alleged right to compensation. The factual aspect of this phase of the case is presented in the last paragraph above quoted from the department’s opinion. It is impprtant to note that the department found: “The proposed surgery was in the nature of an exploratory operation.” There is no showing in the record that the proffered operation was not one fraught with danger to'plaintiff’s life or health, or that he might not incur extraordinary suffering in consequence thereof. Nor was plaintiff assured that the tendered operation offered a reasonable prospect of relieving or correcting Ms incapacity. Instead the operation was, as the department found, purely exploratory. Its purpose was not remedial, but instead by it, defendant hoped to discover the cause of plaintiff’s incapacity. Plaintiff’s refusal under the circumstances to submit to the operation did nbt constitute a reason or ground for denying’ compensation. This is true notwithstánding plaintiff indicated a willingness to submit to the operation provided he was paid compensation for the time he had lost in his employment prior to the offer. He would have been justified in unconditionally refusing to submit to the operation in view of the circumstances disclosed by the record. The applicable rule of law is stated in Kricinovich v. American Car & Foundry Co., 192 Mich. 687, as follows:
“ ‘If the operation is not attended with danger to life or health, or extraordinary suffering, and if, according to the best medical or surgical opinion, the operation offers a reasonable prospect of restoration or relief from the incapacity from which the workman is suffering, then he must either submit to the operation or release his employers from the obligation to maintain him.’ ”
Such an operation was not tendered plaintiff in the instant case.
Another' contention of appellant is that plaintiff is not entitled to compensation when, as the record discloses, he continued to work for defendant for some months after the date of the injury, and through no fault of defendant plaintiff was discharged from his employment because of his refusal to pay union dues. As hereinbefore quoted from the department’s opinion: “Plaintiff’s employment was terminated November 8, 1945 by his employer for the reason that he had failed to pay his union dues. The employer’s contract with the union pro vides for a dismissal of employees who do not maintain their membership in the union by payment of dues.” In the instant case during the latter portion of his employment plaintiff was given light work of a character that with intermittent layoffs he was able to perform. During the last months prior to his discharge his earnings were greatly reduced. Fiona the last week in June to November 8th, when plaintiff was discharged his average weekly earnings were less than $10. In discussing this phase of the case appellant states in its brief:
“Plaintiff had been a member of the union and it was a matter entirely between himself and the union as to whether he would pay his union dues or become ineligible for work under the union contract with the defendant by refusing’ to pay his dues. This is a matter over which the defendant had no control.' It was entirely within the control of the plaintiff. * * *
“Plaintiff would not contend that under the present law he may voluntarily quit a favored job that he is capable of performing’ and thereby become eligible for compensation, and yet, in the case at bar, plaintiff’s discharge is the equivalent of a voluntary quit.”
As applied to the instant case the fallacy in appellant’s contention is that plaintiff by being discharged thereby became eligible for compensation. The fact is, plaintiff under this record would have been entitled to compensation even though he had continued in the light employment provided by appellant for him at a rate of substantially $10 per week. Prior to his injury he earned as a common laborer an average weekly wage of $56.53, as determined by the department. .The governing statutory provision for compensation in the event of partial disability reads:
“While the incapacity for work resulting from the injury is partial, the employer shall pay * * * to the injured employee a weekly compensation equal to 66% per centum of the difference between his average weekly wages before the injury and the average weekly wages he is able to earn thereafter, but not more than $21.00 a week; and in no case shall the period covered by such compensation be greater than 500 weeks from the date of the injury. ’ ’ Workmen’s compensation law, part 2, § 10 (2 Comp. Laws 1929, §8426), as amended by Act No. 245, Pub. Acts 1943 (Comp. Laws Supp. 1945, § 8426, Stat. Ann. 1946 Cum. Supp. § 17.160).
It is obvious under the quoted statutory provision that plaintiff, even though he had continued his employment, would have been entitled to the maximum of $21 weekly compensation in consequence of his loss of earning capacity by reason of partial disability. Therefore appellant was not prejudiced by the amount of compensation awarded. Nor was appellant prejudiced by plaintiff’s employment having been terminated. Had plaintiff continued working appellant would have been required to pay the wages which are presumed to have been the fair value of the services plaintiff would have rendered.
In support of its position appellant quoted in its brief from an annotation in 149 A. L. E. 437 the following: “If he (the employee) leaves his new work voluntarily without sufficient excuse, he will not be held to be entitled to compensation during the period of his idleness.” To present a fair understanding of the above quotation appellant should have noted the citatipn therein to Matter of Jordan v. Decorafive Co., 230 N. Y. 522 (130 N. E. 634), which case held that an employee who suffered an injury which impaired his ability to do heavy work was not en titled to compensation if he could obtain and perform lighter work at an equal earning. In the instant case there is no contention nor could there be that plaintiff was able to do but refused lighter work at a wage equal to that he received at the time of his injury. Nor do we find any support for appellant’s contention in Kalonsky v. Goebel Brewing Co., 282 Mich. 638, cited by appellant. A pertinent headnote to that case reads:
“Employee whose thumb was so injured as to prevent him from completely flexing it but which did not impair his wage-earning ability held, not to be entitled to an award of additional compensation after being laid off because of union regulation rather than inability to perform his work as operator of pasteurizing machine at a brewery since he has not sustained his burden of showing that disability lessened his earning capacity.”
Decision in the Kalonsky Case is not in point with the instant case wherein it conclusively appears plaintiff’s disability has materially lessened his earning capacity. For a very like reason it may be said that our decision in Pigue f. General Motors Corporation, 317 Mich. 311, affords appellant no support in the instant case. Unlike the plaintiff in the instant case, Pigue after his injury was given lighter employment at which he was able to earn wages equal to his former wages, and obviously would have done so had .he not joined his fellow employees in refusing to work. On the contrary in the instant case had plaintiff continued in his employment he would not have been able, because of his disability, to have earned the same wages in the lighter work afforded him as he earned prior to his accident.
We find no reason urged by appellant and sus tained by tbe instant record which would justify altering the award of compensation made by the department. But our decision would be incomplete, and might be misleading, if we did not disapprove of the following quoted by appellant from the department’s opinion:
‘ ‘ Thus, there seems to be only' one solution to this dilemma and that is to compromise. In our opinion, an equitable result can be obtained by awarding compensation benefits to the date of the hearing before'the deputy commissioner.”
The right to compensation is a matter of law, fixed by the statute. Holloway v. Ideal Seating Co., 313 Mich. 267. It is not a right to be determined as a matter of compromise or in an effort to obtain an equitable result. Our affirmance of the award in the instant case is not based on either of the above grounds,- but instead because our review satisfies us that the department, under the law of this State, made a proper award as against any objection raised on this appeal. The award is affirmed, with costs to appellee.
Carr, C. J., and Bushnell, Sharpe, Boyles, Reid, and Dethmers, JJ., concurred. Butzel, J., did not sit. | [
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Dethmers, J.
This is a suit for specific performance of an oral agreement to lease. The plaintiff, Frank Murillo, claims that on July 24, 1945, defendants made him an oral offer to lease 'the premises in question to him and any partner of his choice, for a term of 5 or 10 years, at plaintiffs’ option, at a rental of $60 per month payable monthly in'advance, if said plaintiff and such partner would purchase the grocery business then being conducted therein by a tenant of defendants’; that in reliance on such offer plaintiff Murillo persuaded plaintiff Tafoya to join him in the undertaking and they bought the grocery business on July 25th for $3,500, took possession on July 26th, paid defendants $60 rent in advance on August 6th, the previous tenant having paid up to that date, paid a like amount in advance monthly thereafter, and, after taking possession, with defendants’ consent, remodeled the store at considerable expense to themselves; that plaintiffs have frequently asked defendants to give them a lease for five years as agreed, but that defendants have refused so to do. Defendants deny the agreement in toto. The findings of fact of the trial court are in accord with the claims of the plaintiffs, and an examination of the record convinces us of the correctness of those findings. From a decree for specific performance defendants appeal. •
The questions involved on appeal, as stated in defendants ’ brief, are:
1. “Can there be an oral contract for lease outside the statute of frauds, where the terms are indefinite, the personnel of the parties is indefinite, there is no fixed time for the continuation of the lease, and the entire transaction is unilateral and not binding on the parties who are plaintiffs in this suit?”
2. “Does an entry into possession as assignee or permittee of former tenant ripen into partial performance of an alleged oral contract without consent or affirmative action on part of Owner of realty?”
We think the agreement sufficiently definite as to the term of the lease, parties, rental and property involved to be enforceable. When defendants ’ offer was relied upon and accepted by plaintiffs, it became a mutually binding agreement. The premise of defendants’’second question is not supported by the record. Plaintiffs entered into possession by reason of, and in reliance upon, defendants’ offer and as their tenants. .
The trial court properly based its decision on the authority of Losey v. Hutchinson, 209 Mich. 318. The situation presented in that case is concisely stated in the syllabus, as follows:
‘ ‘ On a bill for the specific performance' of an agreement to make a written lease for three years, testimony by plaintiffs that, in pursuance of said agreement, they went into possession of said premises, paid the stipulated rent in advance, and, on defendant’s refusal to make certain agreed repairs, made them themselves at a cost of approximately $200, held, sufficient part performance to take the agreement out of the operation of the statute of .frauds and to entitle plaintiffs to a decree.”
In that case the Court, in commenting on the case of Charlet v. Teakle, 197 Mich. 426, said:
“In that ease while the tenant was in possession of certain premises the landlord orally agreed to extend the lease, if the tenant would make certain improvements in the room he was occupying and lease the adjoining room. The tenant made the improvements and took possession of the adjoining room and paid the rent in accordance with the oral agreement. Upon the landlord’s refusal'to extend the lease the tenant filed his hill for specific performance of the oral agreement, and this Court affirmed the holding of the trial court in which it decreed specific performance of the oral agreement.”
In the Gharlet Case the Court found that there was such performance of the oral agreement as to satisfy 3 Comp. Laws 1915, § 11979, which is identical to 3 Comp. Laws 1929, § 13415 (Stat. Ann. § 26.910) and which provides, as to the statute of frauds, as follows:
“Nothing in this chapter contained shall he 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. ” ’
The rule applicable is well stated in the case of Guzorek v. Williams, 300 Mich. 633, 638, 639, as follows :
“If one party to an oral contract, in reliance upon the contract, has performed his obligation thereunder so that it would he a fraud upon him to allow the other party to repudiate the contract, by interposing the statute, equity will regard the contract as removed from the operation of the statute. See Lyle v. Munson, 213 Mich. 250; Sage v. Sage, 230 Mich. 477; Woods v. Johnson, 266 Mich. 172; Policha v. Voss, 292 Mich. 494.”
"We believe there was such performance of the oral agreement by plaintiffs as to satisfy the stat ute (3 Comp. Laws 1929, § 13415 [Stat. Ann. § 26.910]) and entitle plaintiffs to specific performance.
Decree affirmed, but without costs in- this Court inasmuch, as plaintiffs have filed no brief on appeal.
Carr, C. J., and Butzel, Bushnell,- Sharpe, Boyles, Reid, and North, JJ., concurred. | [
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Bushnell, J.
Plaintiff Fay Starkstein obtained a decree of divorce from defendant .William Stark-stein on December 17, 1945. She was awarded the custody of the two minor children, and defendant was ordered to pay the snm of $20 per week for their support and maintenance. Alimony for the support of plaintiff was expressly reserved in the decree.
On March 28, 1946, plaintiff filed a petition for modification of the decree, representing that Stark-stein’s income had substantially increased and that he was then able to pay a minimum of $500 per month to maintain petitioner and the minor children in the manner in which they had always been accustomed.
In addition to plaintiff’s testimony, defendant’s deposition, taken at Syracuse, New York, July 8, 194t6, was offered and received in evidence. This deposition indicated that defendant had .acquired, additional property after the decree of divorce was grantéd. Following the reading of the deposition a colloquy ensued between the court and plaintiff’s attorney in which the court indicated that the petition would be denied on its face “because it does not take $500 a month to support two children.” "When counsel replied that Starkstein had other sources of income, and the court inquired as to them, counsel then requested that Starkstein, who was. present in the court room, take the stand in order to present this information to the court. Upon the objection of defendant’s counsel to such examination, the trial judge refused to permit Starkstein to testify, and said:
“Then this is a fishing expedition. We are not going into that. Here is a woman who got $23,000.' Since then he has nothing except the $1,250 a month he is earning on an agreement executed after the divorce was granted. I will follow the recommenda tion of the friend of the court, which is $20 a week for the support of the children. The further petition of the wife will be denied. I will also deny the motion for attorney fee.”
Plaintiff has appealed from the order denying a modification of the divorce decree. In addition to the questions presented with respect to the sufficiency of the allowance for the children and the refusal to allow alimony for the wife, it is argued that the trial court should have permitted an examination of the defendant in open court, even though his deposition, had previously been received in evidence.
Section 12, chap. 17, of the judicature act (Act No. 314, Pub. Acts 1915, as amended (3 Comp. Laws 1929, § 14166 [Stat. Ann. § 27.860]) reads:
“Depositions taken under this act may be read and considered in evidence at the trial or on any hearing, and on appeals, and retrials of the. same cause of action, but the court shall have power to regulate the use, to prevent abuses thereof, and may order the retaking of testimony, or the production of the witness, if within the jurisdiction, notwithstanding that his deposition has been taken. In any case, either party may obtain subpoena and compel the usual attendance and re-examination of the witness, notwithstanding his deposition has been taken, if he is within the jurisdiction' of the court and able to attend, and give his testimony.”
See, also, section 66 (3 Comp. Laws 1929, § 14220 [Stat. Ann. § 27.915]).
Under the provisions of these statutes, plaintiff had the right to compel defendant to take the stand, notwithstanding his previous deposition. See Dunn v. Dunn, 11 Mich. 284; Emlaw v. Emlaw, 20 Mich. 11; Columbus Sewer Pipe Co. v. Ganser, 58 Mich. 385 (55 Am. Rep. 697); Thelen v. Mutual Benefit Health & Accident Assn., 304 Mich. 17. See, also, Court Bules Nos. 31 and 32 (1945).
The order of the trial court is vacated, but the present record is insufficient to permit de novo determination of the controversy. Therefore, the cause is remanded for further proceedings in conformity with this opinion, including the plaintiff’s right to take defendant’s testimony in open court or by further deposition. Costs to appellant.
Carr, C. J., and Butzel, Sharpe, Boyles, Beid, North, and Dethmers, JJ., concurred. | [
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TAYLOR, C.J.
At issue in this no-fault automobile insurance case is whether provisions of the no-fault act and the parties’ contract of insurance establish the extent of allowable conditions on a medical examination of the claimant, or whether the allowable conditions are within a circuit court’s discretion pursuant to MCR 2.311 (the general rule governing discovery with respect to physical and mental examinations). We conclude that the act and the contract establish the parameters of what is allowed and that the court’s role is confined to adjudicating disputes that arise under them. Accordingly, we reverse the judgment of the Court of Appeals and the order of the trial court that held to the contrary, and remand to the trial court for further proceedings consistent with this opinion.
I. factual background and procedural posture
Alina Muci, an insured of State Farm Mutual Automobile Insurance Company (State Farm), was injured in an automobile accident in May 2002. She sought medical and psychiatric treatment for those injuries and, although the record is sketchy, it appears that she filed a claim with State Farm for personal protection insurance (PIP) benefits pursuant to the established process under the no-fault act, MCL 500.3142(2). In such a situation State Farm, also operating under the procedures of the no-fault act, would have usually demanded, pursuant to MCL 500.3151 and the relevant section of the State Farm insurance policy, that Muci submit to an independent medical examination. How ever, in this case, it appears that, for reasons not indicated in the record before us, State Farm did not demand an independent medical examination. These unknown circumstances, which are irrelevant to the issue before us, culminated in State Farm’s not paying Muci’s claim, and she filed this action for a declaratory judgment, asserting that State Farm was unreasonably refusing to pay PIP benefits to which she was entitled.
As the lawsuit developed, State Farm demanded an unconditional medical examination (customarily referred to as a defense medical examination or DME) pursuant to § 3151 of the no-fault act. Muci refused, asserting that § 3151 and the policy were not exclusively controlling and that, rather, the conduct of any independent medical examination was also governed by MCR 2.311(A), the rule covering independent medical examinations in litigation of any kind. State Farm disputed Muci’s assertion, contending that MCR 2.311(A) conflicts with § 3151, because the rule limits the unqualified right to an independent medical examination provided in § 3151 by requiring that litigation be pending and good cause for the examination be shown, and by allowing court-created conditions on the examination.
State Farm, in a motion to compel Muci to submit to a medical examination pursuant to § 3151, asserted that, as the insurer, it had the unconditional right to an independent medical examination conducted by its own physician without regard to whether litigation was pending or good cause for the examination had been shown. The trial court, evidently believing that MCR 2.311(A) could be read as a rule that merely supplemented § 3151, issued an order allowing the medical examination but subject to many of the conditions proposed by plaintiff. The order included the following conditions:
1. That included with Plaintiffs notice of the medical examiner’s deposition, Plaintiffs counsel shall be entitled to subpoena copies of all IRS form 1099’s for the years 2000,2001, and 2002, inclusive, for payments issued to said examiner, individually, and to any entity which received compensation for Independent and/or Insurance and/or defense medical examinations and related forensic services performed by said examiner, including but not limited to:
a. Independent and/or Insurance and/or Defense medical examination;
b. Independent and/or Insurance and/or Defense medical examination reports;
c. Depositions;
d. Medical records reviews; and
e. Forensic activity for which payments were made.
In the event said examiner refuses to provide the subpoenaed documents at his deposition, Defendant will be barred from introducing said examiner’s testimony at trial.
2. That the Plaintiff may be accompanied by her attorney or other representative as allowed by MCR 2.311(A) to observe the examination and/or be permitted to record the examination by means of simultaneous audio and visual recording.
3. No other persons other than Plaintiff, her representative, the videographer, and designated medical examiner and his or her staff are allowed to be present during the examination.
4. That the examination must be limited to Plaintiffs conditions, which are in controversy in this action, as provided by the Michigan Court Rules of 1985.
5. Any persons assisting the defense medical examiner must be fully identified by full name and title to Plaintiff, Plaintiffs representative, and on the video.
6. Defendant shall provide transportation or pay transportation to the Plaintiff for the evaluation/examination. If the Plaintiff chooses to drive or be driven by someone else she knows, the Defendant will reimburse the Plaintiff for reasonable transportation costs to and from each examination, at the rate of .35 cents [sic] a mile.
7. That the total time for examination and testing, if applicable, shall not be limited by Plaintiff or Plaintiffs counsel.
8. That a copy of this order shall be provided to the physician by the defense attorney prior to the exam.
9. That the Plaintiffs counsel will be provided a current copy of the curriculum vitae of the defense medical examiner no more than thirty (30) days after the scheduled appointment, [sic] As well as:
a. Within 21 days of the entry of this order Defendant will provide a statement of the reasonable charge for the Plaintiffs counsel taking of 1 hour deposition of the defense medical examiner at the medical examiner’s office.
b. The full and correct name of the defense medical examiner (or separate billing entity, i.e. payee), with the tax identification number so that Plaintiff can comply with tax code and regulation requirements for any payment made in taking the examiner’s deposition.
10. That no diagnostic test or procedure that is painful, protracted, or intrusive will be allowed as set forth in the Michigan Court Rules of 1985. X-rays will be allowed.
11. That the Plaintiff may be held responsible for cancellation fees charged the Defendant, unless the Plaintiff gives notification to the office of the Defense counsel 48 hours before canceling the appointment.
12. That the Plaintiffs attorney will he permitted to intercept communications between the Plaintiff and the defense medical examiner, in the same manner as if the Plaintiffs deposition were being taken and if the communications are in violation of this order. Otherwise the attorney will not involve himself in the examination proceedings.
13. Defendant’s attorney shall provide all pertinent information to the defense medical examiner.
14. That Plaintiff will not be required to give any oral history of the accident.
15. That Plaintiff will not be required to give any oral medical history not related to the areas of injuries claimed in this lawsuit.
16. That information that may be required by the Defense medical examiner may be obtained through the normal course of discovery.
17. That Plaintiff will not be required to sign any paperwork or fill out any paperwork at the defense medical examiner’s office, including “patient information forms” or “consent forms” or the like, since the Plaintiff is not a patient of the defense medical examiner’s office and is submitting to this examination only pursuant to Court Order and the requirements of the Michigan Court Rules of 1985.
18. That Plaintiffs counsel will be provided a copy of any and all reports and writings generated by the defense medical examiners in this matter pursuant to the Michigan Court Rules of 1985, including, but not limited to, a copy of a detailed written report, setting out any history obtained, examination, findings, (including the results of all tests made, diagnoses, prognoses, and conclusions of the examiner, all record review reports, a copy of all reports of earlier examinations of the same condition of the examinee made by that of [sic] any other examiner).
19. Throughout the litigation, the evaluation and examiner will be called and referred to as a defense medical evaluation and defense medical examiner respectively; and the term “independent medical evaluation” and/or “independent medical examiner” will not be used in the report, orally in a deposition, or at trial.
This order, with its conditions, prompted State Farm to file an application for an interlocutory appeal in the Court of Appeals. The Court of Appeals granted the application and, in a published opinion, the divided panel affirmed the trial court’s order. Muci v State Farm Mut Automobile Ins Co, 267 Mich App 431; 705 NW2d 151 (2005).
Judge FITZGERALD, writing for the majority, stated that while § 3151 gave the parties the right to include reasonable provisions in the policy regarding medical examinations, it did not give the parties a right to contractually determine how to proceed with discovery, and also stated that the trial court properly treated State Farm’s motion to compel a medical examination in the present litigation as a discovery device controlled by MCR 2.311. Muci, supra at 440-442.
Presiding Judge SAAD dissented, stating that the “no-fault law should govern a no-fault insurer’s statutory right to have a claimant submit to a medical examination” and that this right “does not depend on whether an insured has filed a lawsuit for failure to pay” or if there is a showing of “good cause.” Id. at 445, 446 (SAAD, EJ., dissenting). Further, the dissent concluded that the Legislature had made no provisions for the conditions placed on the examination of the kind the trial court imposed in this case. The dissent stated that “MCR 2.311 should not be used preemptively to circumvent our Legislature’s extensive statutory scheme for dealing with medical examinations under the no-fault act” and that “it is clear that our Legislature dealt comprehensively with both the question of medical examinations for PIP claimants and the appropriate penalties for an insurer’s unreasonable refusal to pay benefits.” Id. at 446, 448. Therefore, the dissent concluded, “[I]f a no-fault carrier abuses its right under § 3151, a trial court should use no-fault law and apply the remedies available in [MCL 500.3142, 500.3153, and 500.3148] rather than use MCR 2.311 to impose condi tions for the taking of such examinations — conditions our Legislature chose not to impose.” Id. at 448.
State Farm sought leave to appeal in this Court, arguing that this effort of plaintiffs counsel placed at risk State Farm’s “ability to conduct fair and meaningful discovery.” This Court ordered oral argument on whether the application for leave to appeal should be granted. 475 Mich 877 (2006).
II. STANDARD OF REVIEW
The interpretation of court rules and statutes presents an issue of law that is reviewed de novo. Lapeer Co Clerk v Lapeer Circuit Judges, 465 Mich 559, 566; 640 NW2d 567 (2002).
III. ANALYSIS
The Legislature enacted the no-fault act in 1972. The act eliminated the old automobile tort reparations system for injured parties and replaced it with a mandatory coverage, no-fault automobile insurance system. Under this scheme, an injured insured was guaranteed what the Legislature considered to be a sufficient and expeditious recovery from his or her own insurer for all expenses for reasonably necessary medical care, recovery, and rehabilitation, as well as some incidental expenses. Kreiner v Fischer, 471 Mich 109, 114; 683 NW2d 611 (2004).
From our first handling of this statute in an advisory opinion issued in 1973, Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich 441; 208 NW2d 469 (1973), we have, without exception, emphasized the act’s comprehensive nature. What is unmistakable about this first-party payment scheme is that it was designed to cover contingencies that could arise, including, as relevant here, the process for making a claim, the procedures for investigation by the insurer, and the range of available enforcement tools. All of which are found within the four corners of the act. Thus, the legislative enactment in great detail dictated how injured parties are to make claims with “reasonable proof,” mandated rapid payment within 30 days by insurers if the proofs were reasonable, and established fraud prevention investigation and examination rights for insurers that worked in accord with those important goals. Thus, upon receiving a claim, insurers have great latitude in evaluating the claim, including scheduling a medical examination. In this regard, MCL 500.3151 provides:
When the mental or physical condition of a person is material to a claim that has been or may be made for past or future personal protection insurance benefits, the person shall submit to mental or physical examination by physicians. A personal protection insurer may include reasonable provisions in a personal protection insurance policy for mental and physical examination of persons claiming personal protection insurance benefits.
Because economy in the handling of claims to reduce transaction costs was also an important goal of the no-fault scheme, Kreiner, supra at 117, it is noteworthy that most claims are made, investigated, and either paid or rejected without a lawsuit being filed or indeed any court intervention or even lawyer involvement. **4 To allow for enforcement, should it be needed, the Legislature, in § 3153, authorized sanctions against an insured who refuses to submit to an examination, including dismissal of the insured’s claim and an award of reasonable attorneys fees against the insured. *5 6It also made provisions to protect an insured from discovery practices that cause annoyance, embarrassment, or oppression in MCL 500.3159, which provides:
In a dispute regarding an insurer’s right to discovery of facts about an injured person’s earnings or about his history, condition, treatment and dates and costs of treatment, a court may enter an order for the discovery. The order may be made only on motion for good cause shown and upon notice to all persons having an interest, and shall specify the time, place, manner, conditions and scope of the discovery. A court, in order to protect against annoyance, embarrassment or oppression, as justice requires, may enter an order refusing discovery or specifying conditions of discovery and may order payments of costs and expenses of the proceeding, including reasonable fees for the appearance of attorneys at the proceedings, as justice requires.
The argument of the insured in this matter, which was adopted by the trial court and the Court of Appeals majority, has been that in spite of the Legislature’s obvious intent shown throughout the no-fault act to treat automobile accident cases falling within the scope of the act differently, these cases, and in particular this claim and investigation situation, should be seen as just another species of civil litigation subject to all the generally applicable court rules. While the court rules control matters on which the no-fault act is silent, they do not control matters specifically addressed by the act. Here, where the act covers independent medical examinations, it is entirely antithetical to the Legislature’s desired approach to argue that § 3151 does not give the insurer the right to include a policy provision allowing it to choose the examiner or even insist on the examination itself. It is simply incorrect to argue that what can be done under § 3151 of the no-fault act is no different from what is required under MCR 2.311; after all, the court rule requires pending litigation and the insurer to show good cause, and allows court-imposed conditions as a predicate to the examination while § 3151 does not have these requirements. Indeed, under §3151 an insured must submit to a medical examination. In contrast, under MCR 2.311, whether an insured must submit to a medical examination is left to the trial court to decide. Therefore, the court rule and the statute conflict because that which is required under § 3151 is merely discretionary under MCR 2.311.
Arguing in the alternative, however, Muci asserts that if it is conceded that the statute and the court rule are in conflict, the court rule should control because, as Muci sees it, claims and investigations are procedural, not substantive, and under McDougall v Schanz, 461 Mich 15; 597 NW2d 148 (1999), that means that the court rule controls. Muci misunderstands the rule of McDougall, which holds that a statute is substantive when, as in this case, it concerns a matter that has “ ‘as its basis something other than court administration Id. at 31 (citation omitted). Accordingly, the provisions concerning medical examinations, because they do not concern court administration, are substantive, not procedural, and are supreme over the court rule, just as the general court rule concerning experts’ qualifications must, pursuant to McDougall, supra at 30-31, yield to statutory requirements concerning expert witnesses’ qualifications.
Thus, we conclude that the no-fault act comprehensively addresses the matter of claimant examinations. Accordingly, MCR 2.311 is not applicable to such examinations.
Muci argues she has demonstrated good cause under § 3159 and can thus get an order imposing conditions on the examination as § 3159 allows because, as a general matter, physicians hired by an insurer are adversarial agents of the insurer and write their reports accordingly. Contrary to Mud’s assertions, good cause may only be established by “ ‘a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements.’ ” Hertenstein v Kimberly Home Health Care, Inc, 189 FRD 620, 624 (D Kan, 1999), quoting Gulf Oil Co v Bernard, 452 US 89, 102 n 16; 101 S Ct 2193; 68 L Ed 2d 693 (1981). Physicians are presumed to be bound by the methodologies of their profession and by principles of professional integrity. Only with demonstrable evidence that the discovery order or medical examination will cause the claimant annoyance, embarrassment, or oppression can a claimant rebut this presumption. Until this presumption is rebutted, a court may not impose conditions on an examination under § 3159.
Muci claims that she provided a specific demonstration of good cause through evidence that one of State Farm’s physicians had previously delved into matters protected by the attorney-client privilege by asking an examinee about the status of settlement negotiations in her lawsuit. Specifically, plaintiff introduced a written medical report prepared by the same physician who was to examine Muci. In the medical report, defendant’s examiner made the following notation as part of a previously conducted independent medical examination:
When I asked her how her lawsuit was progressing she said she really did not know. When I inquired if there had been an offer she said she believed that one had been made. When I asked her what her attorney’s advice to her had been she said “It’s up to me;” she said that she would not, however, settle for the amount that was offered. She does not really know what amount she would like.
Here, plaintiff has produced demonstrable evidence that, on a previous occasion, defendant’s medical exam iner asked inappropriate questions of another examinee during an independent medical examination, including questions regarding settlement issues and inquiring into areas unquestionably protected by the attorney-client privilege. We can fathom no explanation, and defendant has provided none, explaining what appropriate purpose this line of questioning would serve in the context of a medical examination. In this case, where plaintiff has proffered evidence that the doctor previously engaged in inappropriate questioning, plaintiff has established a basis in fact for requesting that the trial court impose conditions requiring that the doctor refrain from engaging in similar questioning in Muci’s examination. Such questioning surely provides “good cause” for judicial intervention to protect against “annoyance, embarrassment or oppression,” the statutory bases for imposing conditions on discovery under MCL 500.3159.
The remaining question concerns whether the various conditions imposed by the trial court on the independent medical examination were appropriate to protect against annoyance, embarrassment, or oppression. The trial court’s discretion to specify conditions of discovery in no-fault cases is specifically limited to protecting “against annoyance, embarrassment or oppression, as justice requires.” Therefore, any conditions of discovery imposed by the trial court must be fashioned to avert the annoying, embarrassing, or oppressive action or event that the insured establishes by her good-cause showing.
In this case, the trial court relied on MCR 2.311(A), rather than MCL 500.3159, in imposing 19 conditions on the independent medical examination defendant is entitled to conduct under § 3151. Many of those conditions bore no apparent relationship to the “annoyance” the plaintiff established-improper questioning by the medical examiner concerning the status of the litigation and attorney advice to the insured. On remand, in the event that the defendant insists on using the medical examiner who asked the improper questions, the trial court shall reconsider plaintiffs proposed examination conditions, and determine which conditions, if any, ought be imposed in light of the evidence proffered by plaintiff.
IV CONCLUSION
In a no-fault automobile insurance case, the act and the provisions of the parties’ insurance policy control whether any conditions may be placed on independent medical examinations. A trial court’s ability to adjudicate disputes arising under the statute and the insurance policy regarding examinations is limited to the authority granted by the no-fault act itself, primarily the provisions of §§ 3142, 3148, 3151, 3153, and 3159, and such other sections as may apply. When an insured fails to demonstrate good cause that submission to a particular examination will cause annoyance, embarrassment, or oppression, the trial court may not impose conditions on the examination. We reverse the order of the trial court and the Court of Appeals judgment that affirmed the trial court’s order, and remand to the trial court for further proceedings.
Reversed and remanded to the trial court.
Corrigan, Young, and Markman, JJ, concurred with Taylor, C.J.
MCL 500.3142(2) provides:
Personal protection insurance benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained. If reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. Any part of the remainder of the claim that is later supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. For the purpose of calculating the extent to which benefits are overdue, payment shall be treated as made on the date a draft or other valid instrument was placed in the United States mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery.
A person making a claim shall “be examined by physicians chosen and paid by us as often as we reasonably may require.”
Shavers v Attorney General, 402 Mich 554, 579; 267 NW2d 72 (1978); Davey v Detroit Automobile Inter-Ins Exch, 414 Mich 1, 10; 322 NW2d 541 (1982); Thompson v Detroit Automobile Inter-Ins Exch, 418 Mich 610, 624; 344 NW2d 764 (1984); Priesman v Meridian Mut Ins Co, 441 Mich 60, 65; 490 NW2d 314 (1992); Michigan Ed Employees Mut Ins Co v Morris, 460 Mich 180, 194; 596 NW2d 142 (1999); State Farm Fire & Cas Co v Old Republic Ins Co, 466 Mich 142, 150; 644 NW2d 715 (2002).
This is very different from the situation contemplated by MCR 2.311, which, by its own terms, is only applicable when litigation is pending. The failure to appreciate this distinction between § 3151 and MCR 2.311 has led the dissent to stray in its analysis.
Other such provisions are also found in § 3142 and § 3148.
We reject State Farm’s argument that judicial authority to impose conditions on discovery under § 3159 is specifically limited to discovery sought under MCL 500.3158. Unlike, for example, § 3153, which specifically states it applies to §§ 3151 and 3152, there is nothing in the plain language of § 3159 that limits its application to pretrial discovery from medical entities and employers under § 3158. Rather, § 3159 clearly pertains to disputes about discovery regarding an injured person’s ‘‘history, condition, treatment and dates and costs of treatment” without limiting the source of the discovery to medical entities and employers.
When a claim has been made under § 3142(2), § 3151 requires the no-fault claimant to “submit” to physical or mental examination under rules in the policy. The parties focus on definitions and purported ambiguities that the use of the word “submit” introduces. We need not sort through this because, even if there is doubt about its meaning, it is dispelled when one examines the enforcement provisions in § 3153 regarding the refusal to comply with § 3151. There, after indicating that the court cannot cause the arrest of the insured for disobeying a request to submit to a physical or medical examination required in § 3151, it provides for an order that directs the disobedient person (inescapably the insured) to submit to an examination and gives enforcement powers that include the disallowance of evidence and defenses of the insured. The section further allows the entry of a default and the assessment of reasonable attorney fees against the insured. Given all this, it is unmistakably clear that under § 3151, the insurer has the right to include a policy provision allowing it to pick the examiner. Further, MCL 500.3152 requires that the report generated be made available to the insured and that any refusals to cooperate under these rules can be sanctioned by the court.
We further note that the court rule conflicts with § 3159. While MCR 2.311 requires the party sseeking the medical examination to demonstrate good cause, § 3159 requires the party seeking to impose conditions on a discovery order such as an order for a medical examination to show good cause.
We note that the Court of Appeals concluded that State Farm waived any challenge to two of the imposed conditions because its attorney agreed to the conditions if the court rule applied, Muci, supra at 442; however, because the court rule does not apply in the instant case, we conclude that the challenge to the relevant imposed conditions was not waived. | [
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Wahls, J.
In Docket No. 192303, defendant City of Midland appeals as of right from the trial court’s amended judgment entered in favor of plaintiffs CS&P, Inc., 3-S Construction, Inc., and LBL Investments following a jury trial. In Docket No. 192304, Midland appeals as of right from the amended judgment entered in favor of plaintiff Cincinnati Insurance Company following a consolidated jury trial. We affirm.
According to the undisputed testimony, water and sewage emanating from the toilets and floor drains invaded the premises of a commercial building located in Midland and owned by LBL Investments. Both CS&P and 3-S Construction occupied suites in the lower level of the building. The flooding caused extensive damage to the building and its contents. The tenants could not occupy the lower portion of the building for several weeks. CS&P received $48,367.62 in insurance proceeds from Cincinnati Insurance because of the damage. Cincinnati Insurance subsequently received a $10,000 salvage refund. Broken risers in the sewer on a street adjacent to the building caused a blockage, and diverted the water and sewage into the building. Midland admitted that it owned the sewer system, that it was responsible for maintaining, installing, and repairing sanitary sewers, and that the section of the sewer that failed had been cleaned and inspected, no problems having been found.
On November 2, 1994, CS&P, 3-S Construction, and LBL Investments filed a one-count complaint against Midland, claiming that Midland was liable for damages to the building and its contents under a trespass-nuisance theory. On November 7, 1994, Cincinnati Insurance, as the subrogee of CS&P, filed a complaint against Midland. In its pretrial statement, Cincinnati Insurance indicated that it was proceeding under a theory of trespass-nuisance. Midland pleaded governmental immunity and contributory or comparative negligence as affirmative defenses to both complaints.
3-S Construction, LBL Investments, and Cincinnati Insurance all moved for summary disposition pursuant to MCR 2.116(C)(9) and (10), arguing that Midland had admitted to the elements of trespass-nuisance and that negligence did not need to be proved to find liability under a trespass-nuisance theory. CS&P made a similar motion pursuant to MCR 2.116(C)(10). Midland filed motions for summary disposition pursuant to MCR 2.116(C)(7), (8), and (10), arguing that because maintenance of a sewer system is a governmental function, plaintiffs’ claims were barred by governmental immunity.
The trial court held that plaintiffs had pleaded causes of action under the trespass-nuisance exception to governmental immunity, that a genuine issue of material fact remained only with respect to plaintiffs’ damages, and that governmental immunity was not a defense for Midland. The trial court also ruled that negligence was not an element that plaintiffs had to prove to establish Midland’s liability under a trespass-nuisance theory. Following a jury trial with respect to damages, CS&P was awarded $30,348.74 in damages, interest, and costs; LBL Investments was awarded $20,802.99 in damages and interest; 3-S Construction was awarded $10,739.21 in damages and interest; 3-S Construction and LBL Investments were jointly awarded $165.80 in costs; and Cincinnati Insurance, as the subrogee of CS&P, was awarded $33,618. The trial court subsequently awarded mediation sanctions to plaintiffs on the basis of Midland’s refusal to accept the meditation determinations.
Midland’s sole issue on appeal is that the trial court erred in ruling that plaintiffs did not need to prove negligence as a predicate to establishing liability under the trespass-nuisance exception to governmental liability. We disagree.
Under the governmental immunity act, MCL 691.1401 et seq.) MSA 3.996(101) et seq., governmental agencies are immune from tort liability when engaged in the exercise or discharge of a governmental function. Phinney v Perlmutter, 222 Mich App 513, 549; 564 NW2d 532 (1997). In Hadfield v Oakland Co Drain Comm’r, 430 Mich 139; 422 NW2d 205 (1988), the Court considered whether there was a nuisance exception to governmental immunity. The Court concluded that a limited trespass-nuisance exception to governmental immunity existed. Continental Paper & Supply Co, Inc v Detroit, 451 Mich 162, 164; 545 NW2d 657 (1996); Hadfield, supra at 145, 205, 209, 213.
Trespass-nuisance is a “trespass or interference with the use or enjoyment of land caused by a physical intrusion that is set in motion by the government or its agents and resulting in personal or property damage.” Continental Paper, supra at 164; Hadfield, supra at 169, 209. To establish trespass-nuisance, a plaintiff must show: (1) condition (nuisance or trespass); (2) cause (physical intrusion); and (3) causation or control (by government). Continental Paper, supra at 164; Hadfield, supra at 169. The trespass-nuisance doctrine applies only to state and local governments. See Cloverleaf Car Co v Phillips Petroleum Co, 213 Mich App 186, 193; 540 NW2d 297 (1995).
In Peterman v Dep’t of Natural Resources, 446 Mich 177, 205, n 42; 521 NW2d 499 (1994), the Court stated the following with regard to a claim pursuant to the trespass-nuisance doctrine:
While a governmental entity must have been a proximate cause of the injury, “the source of the intrusion” need not originate from “government-owned land.” Li [v Feldt (After Remand), 434 Mich 584; 456 NW2d 55 (1990)], supra at 594, n 10. Moreover, “[n]egligence is not a necessary element of this cause of action.” Robinson v Wyoming Twp, 312 Mich 14, 24; 19 NW2d 469 (1945). This is true even if an instru mentality causing the trespass-nuisance was “built with all due care, and in strict conformity to the plan adopted by” a governmental agency or department. Seaman v City of Marshall, 116 Mich 327, 329-330; 74 NW 484 (1898).
This Court is obligated to follow the Supreme Court’s decision in Peterman until such time as the Supreme Court overrules itself. See O’Dess v Grand Trunk W R Co, 218 Mich App 694, 698, 700; 555 NW2d 261 (1996). Accordingly, the trial court did not err in ruling that plaintiffs did not need to prove negligence as a predicate to establishing liability under the trespass-nuisance exception to governmental immunity. Id.; Robinson, supra at 23-24.
Affirmed.
Kelly, P.J., concurred.
A person who is not a governmental agency must intend to intrude upon the private property of another in order to be liable under a trespass theory. Cloverleaf, supra at 195. A private actor is not hable for a negligent intrusion onto the property of another. Id.
Unlike the dissent, we conclude that we are bound by the rule in Peterman. Even if the footnote in Peterman is dicta, we believe that the cases cited there bind us to the same rule. See Robinson, supra at 23-24. The trespass-nuisance exception to governmental immunity has its roots in the “Taking” Clause of the Michigan Constitution, Const 1835, art 1, § 19 through Const 1963, art 10, § 2. “Trespassory invasions that stopped short of being ‘takings’ of property were considered actions for which governmental entities should not escape liability.” Hadfield v Oakland Co Drain Comm’r, 430 Mich 139, 155, 168-169; 422 NW2d 205 (1988) (Brickley, J.).
In most jurisdictions, the liability of a municipality for the damage caused by the clogging of a drain or sewer is predicated in the first instance upon its negligence. Anno: Municipality’s liability for damage resulting from obstruction or clogging of drains or sewers, 59 ALR2d 281, 301, § 7[a], Professor Luke K. Cooperrider criticized the Court’s decision in Robinson, supra, as blurring the “distinction between the intrusion that is the intended or necessary result of the defendant’s act and that which is accidental.” Cooperrider, The court, the legislature, and governmental tort liability in Michigan, 72 Mich L R 187, 243 (1973). | [
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