Coates v. Drake
Decision Date | 16 March 1984 |
Docket Number | Docket No. 64295 |
Citation | 346 N.W.2d 858,131 Mich.App. 687 |
Parties | Charles COATES and Carol Peck, Plaintiffs-Appellants, v. Glenn E. DRAKE and North American Van Lines, Defendants-Appellees. 131 Mich.App. 687, 346 N.W.2d 858 |
Court | Court of Appeal of Michigan — District of US |
[131 MICHAPP 689] Sommers, Schwartz, Silver & Schwartz, P.C. by Donald J. Gasiorek, Southfield, for plaintiffs-appellants.
Plunckett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C. by Joseph G. Lujan and Christine Oldani, Detroit, for defendants-appellees.
Before MacKENZIE, P.J., and WAHLS and WARSHAWSKY *, JJ.
Plaintiffs appeal by leave granted from the circuit court's order denying their motion brought under GCR 1963, 528.3 to set aside an order dismissing with prejudice their suit against defendants. The concise statement of facts, stipulated to by the parties and certified by the circuit court, provides in pertinent part as follows:
Neither on appeal nor below have defendants disputed plaintiffs' allegation that at no time did they authorize or consent to the settlement of $17,000 accepted by their attorney and that they [131 MICHAPP 691] did not discover the settlement and dismissal until November of 1981.
The denial of a motion for relief from a judgment brought under GCR 1963, 528.3 will not be disturbed on appeal absent a clear showing of an abuse of discretion. Lark v. The Detroit Edison Co., 99 Mich.App. 280, 282, 297 N.W.2d 653 (1980), lv. den. 410 Mich. 906 (1981). Relief may be granted under GCR 1963, 528.3(6) for "any other reason justifying relief from the operation of the judgment" if subsections (1) through (5) are inapplicable, extraordinary circumstances exist which warrant setting aside the judgment in order to achieve justice, and the substantial rights of the opposing party will not be detrimentally affected by setting aside the judgment. Lark, supra, p. 284, 297 N.W.2d 653; Kaleal v. Kaleal, 73 Mich.App. 181, 189, 250 N.W.2d 799 (1977), quoting Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p. 189. The only subsection other than (6) of GCR 1963, 528.3 which might at first blush appear applicable is (3), but a close reading reveals that (3) is limited to fraud, misrepresentation, or other misconduct "by an adverse party". In the present case, the misconduct was engaged in by plaintiffs' own attorney, and it is undisputed that defendants were not responsible for that misconduct.
The circuit court denied plaintiffs' motion by determining that Henderson v. Great Atlantic & Pacific Tea Co., 374 Mich. 142, 132 N.W.2d 75 (1965), was inapplicable to the instant case. The Supreme Court in Henderson, supra, held that a settlement of the plaintiff's claim, entered into by the plaintiff's attorney without the plaintiff's authorization and the proceeds of which the attorney converted to his own use, was not binding on the plaintiff and did not bar her suit against the defendant, [131 MICHAPP 692] even though the defendant entered into the settlement in good faith and was innocent of any wrongdoing. In so holding, the Court explained:
"The above rule has been adhered to in Michigan in Eaton v Knowles, 61 Mich 625 [, 28 N.W. 740 (1886) ]; Fetz v Leyendecker, 157 Mich 355 [, 122 N.W. 100 (1909) ]; Peoples State Bank v Bloch, 249 Mich 99 [, 227 N.W. 778 (1929) ]; and most recently in Wells v United Savings Bank of Tecumseh, 286 Mich 619 [, 282 N.W. 844 (1938) ]." 374 Mich. 147, 132 N.W.2d 75. (Footnote omitted.)
See also Michigan Nat'l Bank of Detroit v. Patmon, 119 Mich.App. 772, 775, 327 N.W.2d 355 (1982); Presnell v. Wayne Bd. of County Road Comm'rs, 105 Mich.App. 362, 365, 306 N.W.2d 516 (1981).
The trial court agreed with defendants that the rule of Henderson was inapplicable because in that case there was conflicting testimony regarding whether the miscreant attorney, Davies, had assumed control of the plaintiff's case. Davies contended that he was responsible for the conduct of the case, while his law partner, Chalfin, who entered into the contingent agreement with the plaintiff, claimed he merely told Davies to work on the case and that he (Chalfin) remained personally responsible. Henderson, supra, 374 Mich. p. 144, 132 N.W.2d 75. However, our reading of Henderson leads us to conclude that [131 MICHAPP 693] this circumstance was not determinative of the result reached in that case. Rather, the Court stated that it found the settlement was not a bar to the plaintiff's suit because there was "nothing in the record to indicate that Davies had authority from plaintiff to compromise her claim against defendant," Henderson, supra, p. 147, 132 N.W.2d 75. (emphasis added), and not because Davies lacked authority to represent the plaintiff. The Henderson Court made no determination as to whether Davies did indeed have authority to represent the plaintiff because, even if he did, under the above-quoted rule adopted by the Court, he lacked precedent special authority to enter into the settlement and the plaintiff did not subsequently acquiesce in or ratify the settlement. Thus, we find that the court erred in finding Henderson, supra, inapplicable on this ground.
Defendants also contend that Henderson, supra, is inapplicable to the present case because here plaintiffs seek to vacate a court order of dismissal, whereas Henderson dealt only with whether an extrajudicial settlement agreement barred the plaintiff's suit. Thus, defendants would limit the application of the above-quoted rule adopted by the Henderson Court to cases where the settlement agreement was not reduced to a consent judgment or a court order of dismissal. Defendants urge that the rule applicable to the present case is that an attorney has implied authority to settle his client's claim and, if the client fails to deny or repudiate that authority before a court order or judgment is entered, this works as a ratification of the settlement by the client. Defendants rely on Jackson v. Wayne Circuit Judge, 341 Mich. 55, 67 N.W.2d 471 (1954); Bielby v. Allender, 330 Mich. 12, 46 N.W.2d 445 (1951); and Tudryck v. Mutch, 320 [131 MICHAPP 694] Mich. 99, 30 N.W.2d 518 (1948). These three decisions all involved situations, similar to the present case, where the clients sought relief from consent judgments, entered on the basis of settlement agreements made by their attorneys, on the ground that they had not authorized or consented to the settlements and the Supreme Court affirmed denial of relief. However, those cases are factually distinguishable. In Jackson, supra, one of the clients had authorized the settlement, and there was no showing of fraud or deceit on the part of the attorney. In Bielby, supra, the client had made representations to his attorney which caused the attorney...
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