Advance Dry Wall Co. v. Wolfe-Gilchrist, Inc.

• Decision Date: 02 December 1968
• Docket Number: WOLFE-GILCHRIS,No. 2,Docket No. 4366,INC,2
• Citation: 165 N.W.2d 906,14 Mich.App. 706
• Parties: ADVANCE DRY WALL COMPANY, a Michigan corporation, Plaintiff-Appellee, v., a Michigan corporation, and Leonard H. Wolfe, Barbara Wolfe, and Julius M. Grossbart, jointly and severally, as officers and directors of Wolfe-Gilchrist, Inc., Defendants-Appellants
• Court: Court of Appeal of Michigan — District of US

Page 906

165 N.W.2d 906

14 Mich.App. 706

ADVANCE DRY WALL COMPANY, a Michigan corporation, Plaintiff-Appellee, v. WOLFE-GILCHRIST, INC., a Michigan corporation, and Leonard

H. Wolfe, Barbara Wolfe, and Julius M. Grossbart, jointly

and severally, as officers and directors of Wolfe-Gilchrist,

Inc., Defendants-Appellants.

Docket No. 4366.

Court of Appeals of Michigan, Division No. 2.

Dec. 2, 1968.

Released for Publication March 27, 1969.

George J. Fulkerson, Birmingham, for defendants-appellants.

Dee Edwards, Detroit, for plaintiff-appellee.

Before QUINN, P.J., and HOLBROOK and VANDER WAL, ^* JJ.

VANDER WAL, Judge.

Plaintiff filed a bill of complaint on September 11, 1961, in chancery, against Wolfe-Gilchrist, Inc., a Michigan corporation, and Leonard H. Wolfe, Barbara Wolfe, and Julius M. Grossbart, as officers and directors of said Wolfe-Gilchrist, Inc., alleging performance of certain work and labor from January 25, 1957, to March 1, 1958, for the defendant Wolfe-Gilchrist, Inc., and an amount due thereon of $9,339.71. Plaintiff claimed this work was done as a subcontractor under the provisions of the Builders Trust Fund Act, C.L.1948, § 570.151 ¹ [14 Mich.App. 708] Et seq. (Stat.Ann.1953 Rev. § 26.331 Et seq.) and that as such the defendants were charged as trustees for the payment of the account due the plaintiff from the defendant corporation with respect to monies received from the sale of the houses involved. As the court below did not base his judgment on this statute, no further consideration need be given to that part of the case in this opinion.

In the alternative, plaintiff pleaded that the defendant corporation was insolvent after December 31, 1955 and had surrendered its corporate franchise as of December 31, 1956 by the provisions of C.L.S.1961, § 600.3615 (Stat.Ann.1962 Rev. § 27 A.3615) and that as a result, the individual defendants were accountable to plaintiff as trustees of the remaining assets of the corporation under the provisions of C.L.1948, §§ 450.47, 450.74a, 450.75; C.L.S.1961, § 450.74 (Stat.Ann.1963 Rev. §§ 21.47, 21.74, 21.74 (1), 21.75).

After commencement of this action, the court appointed a receiver of the assets of Wolfe-Gilchrist, Inc., and the receiver filed a report on June 14, 1965, which report, among other documents, was admitted in evidence at the time of the trial.

On February 23, 1967, the circuit judge rendered a judgment in favor of the plaintiff corporation against the defendants Leonard H. Wolfe and Barbara Wolfe, his wife, jointly and severally, in the sum of $13,639.99, together with costs in the amount of $88.

The individual defendants were the officers and directors of the defunct corporation and plaintiff claims that the defendants held funds in trust for it under C.L.1948, §§ 450.74a ² and 450.75a (Stat.Ann.1963 Rev. §§ 21.74(1) and 21.75(1)).

The record shows that the defendants Leonard H. Wolfe and Barbara Wolfe entered their appearance by attorney George J. Fulkerson, and an answer was filed on their behalf. That on September 14, 1965, the defendants Leonard H. Wolfe and Barbara Wolfe were served copies of a petition filed by George J. Fulkerson to withdraw from the case. That on the 20th day of September, 1965, an order to withdraw as attorney for the defendants Leonard H. Wolfe and Barbara Wolfe was signed by the circuit judge and that in the same order the trial court set the case for trial for October 21, 1965, at 9:00 o'clock in the forenoon. The order further provided that any further notice of proceedings in this case, with respect to Leonard H. Wolfe and Barbara Wolfe, be by service upon Leonard H. Wolfe and Barbara Wolfe at 30821 Franklin Rd., Franklin, Michigan, their residence. After that time neither defendant, Leonard H. Wolfe nor Barbara Wolfe, entered their appearance in propria persona. The case was not heard on October 21, 1965.

The case did come on for trial February 16, 1967. No written notice of trial was mailed to the defendants, but notice was given to them by telephone to appear on February 16, 1967, for trial. On February 16, 1967, Leonard H. Wolfe, Julius Grossbart, and plaintiff's attorney were present. Defendant Barbara Wolfe did not appear.

After some discussion with the court in chambers, the following took place in open court:

'THE COURT: But, Mr. Wolfe, I told you in chambers and I tell you here in the open court that you ought to give very careful consideration to employing counsel to represent you. You have a right, under the constitution, to represent yourself, but you can't represent your wife. You must know that, and I am telling you that.

I believe that you expressed to me in chambers that as you viewed the situation now you want counsel. Is that right?

MR. WOLFE: Yes, sir.

THE COURT: But I cannot allow any long adjournment for that purpose. This case has been pending far, far, too long in courts.

Now the court on its own motion is going to continue this case until Tuesday morning; at which time, if it isn't settled, we will begin the trial without fail, because the trial was supposed to have begun today.

You can tell him that you are already committed to this court, that this case was continued until Tuesday morning.

You had better get yourself a lawyer.

MR. WOLFE: I was going to say the fact that the case is so complicated, it doesn't give me very much time. Also I have a commitment to be in New York.

THE COURT: You will have to let that go. Now gentlemen, this isn't a request, I am ordering you to be back here Tuesday morning at 9:00 o'clock for this trial.

This case now stands adjourned until Tuesday morning at 9:00 o'clock.' (2/21/67)

On February 21, 1967, neither Leonard H. Wolfe nor Barbara Wolfe appeared and a default judgment was entered pursuant to GCR 1963, 506.6(2). On March 13, 1967, attorney George J. Fulkerson filed a motion for a new trial on behalf of Leonard H. Wolfe, which motion was denied.

The defendants' grounds for appeal may be reduced to 4 issues:

1. Did the lower court have authority to grant the relief sought by the plaintiff?

2. Was there sufficient evidence to sustain the judgment?

3. Did the lower court err in granting judgment when plaintiff's proofs failed to conform with its complaint?

4. Did the lower court fail to comply with the Michigan Court Rules as to proper notice to be given defendants, thereby depriving them of due process of law?

At the hearing held on February 21, 1967, plaintiff presented the following proofs on the record: that the work was done for and on behalf of the defendants by Advance Dry Wall's predecessor, a copartnership; that the amount unpaid thereon was $9,339.71. The 1959 annual report of Wolfe-Gilchrist, Inc. was received in evidence. This report shows that both Barbara and Leonard H. Wolfe were directors and that the corporation had assets of $43,022.98 and liabilities of $154,148.18 on March 31, 1959.

The receiver's report was received in evidence; it is dated June 11, 1965, and stated that the receiver, '* * * is unable to determine the exact amount of the assets of the corporation.', but his report expressly states that Wolfe- Gilchrist, Inc. either had a large interest in land or $47,000 coming from the officers and directors. This report showed the corporation had assets of $132,107.46 and liabilities of $197,747.86 as of March 13, 1959. There was also testimony given by the president of the plaintiff substantiating the claim of the plaintiff.

Therefore, in answer to the first 2 issues, whether the lower court had the authority, and whether there was sufficient evidence to sustain the judgment, the record is clear that the court had authority to grant the...