American Cas. Co. v. Costello, Docket No. 93332

• Decision Date: 24 February 1989
• Docket Number: Docket No. 93332
• Citation: 174 Mich.App. 1,435 N.W.2d 760
• Parties: AMERICAN CASUALTY COMPANY, Plaintiff-Appellant, v. Thomas M. COSTELLO, Sr.; John F. Noonan; William M. Bolger and Noonan, Costello & Bolger, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 760

435 N.W.2d 760

174 Mich.App. 1

AMERICAN CASUALTY COMPANY, Plaintiff-Appellant, v. Thomas M. COSTELLO, Sr.; John F. Noonan; William M. Bolger and Noonan, Costello & Bolger, Defendants-Appellees.

Docket No. 93332.

Court of Appeals of Michigan.

Submitted Jan. 7, 1988.

Decided Jan. 3, 1989.

Released for Publication Feb. 24, 1989.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C. by John P. Jacobs, Christine D. Oldani, and Mary Ellen Darin, Detroit, for plaintiff-appellant.

Collins, Einhorn & Farrell, P.C. by Michael J. Sullivan and Noreen L. Slank, Southfield, for John F. Noonan and William M. Bolger.

Before MacKENZIE, P.J., and HOOD and BORRELLO, ^* JJ.

BORRELLO, Judge.

American Casualty Company appeals as of right from the jury verdict finding no cause of action against John F. Noonan, William M. Bolger and Noonan, Costello & Bolger. We affirm.

American filed suit in circuit court seeking reimbursement for $100,000 it expended pursuant to its surety obligations on a probate executor bond. Thomas M. Costello, the principal on the bond, had misappropriated estate funds and used them for his own purposes. American asserted that the remaining defendants were liable for its loss under the theory that Noonan, Costello & Bolger constituted a partnership in fact or a partnership by estoppel.

Before trial, the circuit court granted defendants partial summary disposition on American's claim of partnership by estoppel. That decision precluded only estoppel by direct representations to American, but left for trial whether American could establish a partnership by estoppel with regard to the estate, to whose rights American would be subrogated. The court reasoned that American had sent preprinted, pre-executed bond forms directly to Costello, without investigation or inquiry into his association with Noonan and Bolger. Therefore, American could not prove the reliance necessary for a direct claim of partnership by estoppel. That decision was not appealed. The only two questions remaining for the jury to resolve were whether Noonan, Costello & Bolger was a partnership in fact and whether Costello had obtained the appointment as executor to the estate as a result of his association with Noonan and Bolger.

Costello and Noonan had practiced law together since the early 1960s. In 1975, Bolger became associated with them. The three attorneys practiced together under the name Noonan, Costello & Bolger, for which they filed a certificate of doing business under an assumed name. The certificate enabled them to open a checking account in the name of Noonan, Costello & Bolger.

Each of the three attorneys adamantly denied that they were partners, but rather asserted that they had joined together in an expense-sharing association. The three never executed a partnership contract, never agreed to share profits or losses, never filed or paid any partnership tax, and never had a client trust account under the Noonan, Costello & Bolger name. Although occasionally the three would "cover" for one another, the attorney appearing would bill the other for his time. Each attorney paid his own secretary, and each had his own separate set of files for his clients.

However, in many respects the attorneys operated as if they were a partnership. All three attorneys used stationery with the assumed name on its letterhead. Noonan, Costello & Bolger was listed in the Michigan The jury indicated by special verdict form that Noonan, Costello & Bolger was not a partnership in fact and that the estate had not relied on Costello's association with Noonan and Bolger when Costello was appointed executor. Therefore, the jury concluded that American had no cause of action against defendants.

Bar Journal and Martindale-Hubbell. The office had one phone number, which was shared by the three attorneys. The expenses for the firm were paid out of the Noonan, Costello & Bolger account after each attorney deposited his share for that particular accounting period.

American raises five issues which we deal with seriatim.

I

American first asserts that the trial court erred in its treatment of M.C.L. Sec. 445.3; M.S.A. Sec. 19.825, concerning certificates of doing business under an assumed name, which provides in relevant part:

"(1) ... A copy of the certificate duly certified to by the county clerk in whose office the same is filed shall be presumptive evidence in all courts of law in this state of the facts contained in the certificate....

"(2) If 2 or more persons file a certificate to carry on a business under an assumed name, the certificate shall be prima facie evidence of a contract of partnership."

The certificate itself was admitted into evidence. On defendants' objection, the trial court denied American's request to admit a copy or take judicial notice of the statute. The trial court also declined to give American's requested special jury instruction that the assumed name "certificate under the law, is prima facie evidence of a contract of partnership and [it] is for the jury to decide whether ... [that presumption] has been rebutted." American argues that the trial court's actions deprived the jury of appreciating the certificate's legal significance. We disagree.

Prima facie evidence is evidence which, if not rebutted, is sufficient by itself to establish the truth of a legal conclusion asserted by a party. People v. Licavoli, 264 Mich. 643, 653, 250 N.W. 520 (1933). Statutory language making proof of one fact prima facie evidence of another fact is analogous to a statutory rebuttable presumption. See, e.g., Raptis v. Safeguard Ins. Co., 13 Mich.App. 193, 199, 163 N.W.2d 835 (1968).

In civil matters, a presumption operates to shift the burden of going forward with the evidence. McKinstry v. Valley Obstetrics-Gynecology Clinic, P.C., 428 Mich. 167, 180, 405 N.W.2d 88 (1987). In Widmayer v. Leonard, 422 Mich. 280, 289, 373 N.W.2d 538 (1985), our Supreme Court stated:

"It is a procedural device which allows a person relying on the presumption to avoid a directed verdict, and it permits that person a directed verdict if the opposing party fails to introduce evidence rebutting the presumption.

"Almost all presumptions are made up of permissible inferences. Thus, while the presumption may be overcome by evidence introduced, the inference itself remains and may provide evidence sufficient to persuade the trier of fact even though the rebutting evidence is introduced. But always it is the inference and not the presumption that must be weighed against the rebutting evidence."

Even if the statute created a rebuttable presumption, the burden of proving the existence of a partnership in fact remained with plaintiff throughout the trial. Once plaintiff had introduced the certificate of doing business under an assumed name, the burden to produce evidence that the relationship between the three lawyers was not a partnership shifted to defendants. Since defendants presented sufficient evidence to rebut American's prima facie evidence, only the underlying inferences remained for the jury.

The court correctly instructed the jury that the assumed name certificate was one factor, among others, which they could consider in determining whether a partnership in fact existed. It then became the We also find no abuse of discretion in the trial court's refusal to read the statute to the jury or enter a copy of the statute into evidence. The trial court believed the statutory language would be confusing to the jury. Further, because defendants submitted rebuttal evidence, the prima facie status of the certificate became insignificant. An irrelevant statute should not be read to a jury. Bourke v. North River Ins. Co., 117 Mich.App. 461, 465-466, 324 N.W.2d 52 (1982).

jury's responsibility to weigh the inferences from the evidence to decide whether a partnership existed.

The trial court erred, however, when it declined American's request that it take judicial notice of M.C.L. Sec. 445.3; M.S.A. Sec. 19.825. Judicial notice of a Michigan statute is mandatory in this state. MRE 202. However, no prejudice resulted from this error, since the circuit court correctly recognized and instructed that the certificate could be considered in determining whether a partnership in fact existed.

II

American next argues that the trial court erred in excluding certain evidence of representations that Noonan, Costello & Bolger was a partnership. At trial, plaintiff offered for admission an application for professional liability insurance upon which Bolger's signature bore the designation "partner." The document also identified Noonan, Costello & Bolger as a partnership. American also objects to the exclusion of the Martindale-Hubbell listing for Noonan, Costello & Bolger as a firm. However, American's sole argument concerning these pieces of evidence is that its exclusion unfairly denied American an opportunity to prove a partnership by estoppel. This argument must fail.

Partnership by estoppel is established by proving two elements: (1) that the defendant represents himself to be a partner or consents to another's representation that he is a partner of one with whom he is not a partner and (2) that the person to whom the false representation is made relies on that representation to his detriment. M.C.L. Sec. 449.16; M.S.A. Sec. 20.16.

At this point, it is critical to note that the only partnership by estoppel question surviving at the time of trial concerned representations made to and relied upon by the estate. The question of estoppel concerning representation made to or relied upon by American had been dismissed before trial. Based on the only estoppel issue left for trial, the trial court properly excluded the proffered evidence. The estate would not have had reason or opportunity to have viewed the professional liability coverage, and no evidence was produced that the Martindale-Hubbell listings were consulted by anyone associated with naming...