Conel Development, Inc. v. River Rouge Sav. Bank, Docket No. 30221

• Decision Date: 05 July 1978
• Docket Number: Docket No. 30221
• Citation: 269 N.W.2d 621,84 Mich.App. 415
• Parties: CONEL DEVELOPMENT, INC., a Michigan Corporation, Plaintiff-Appellee, v. RIVER ROUGE SAVINGS BANK, a Michigan Banking Corporation, Defendant-Appellant, and Underground Television Inspection by Seaway, Inc., a Michigan Corporation, jointly and severally, Defendant. 84 Mich.App. 415, 269 N.W.2d 621
• Court: Court of Appeal of Michigan — District of US

Page 621

269 N.W.2d 621

CONEL DEVELOPMENT, INC., a Michigan Corporation Plaintiff-Appellee, v. RIVER ROUGE SAVINGS BANK, a Michigan Banking Corporation Defendant-Appellant and Underground Television Inspection by Seaway, Inc., a Michigan Corporation, jointly and severally Defendant.

Docket No. 30221.

84 Mich.App. 415, 269 N.W.2d 621

Court of Appeals of Michigan.

July 5, 1978.

Rehearing Denied Aug. 22, 1978.

Released for Publication Sept. 18, 1978.

[84 MICHAPP 417] Anthony J. Knerly, Ecorse, for defendant-appellant.

Timothy Downs, Detroit, for Conel.

Henry J. Freud, Detroit, for Underground.

Before KELLY, P. J., and D. E. HOLBROOK, Jr. and BEASLEY, JJ.

BEASLEY, Judge.

On February 25, 1971, plaintiff, Conel Development, Inc., a Michigan corporation with its principal place of business in Iosco County, filed a five count complaint against defendants, River Rouge Savings Bank, hereinafter referred to as RRSB, Underground Television Inspection By Seaway, Inc., hereinafter referred to as UTV, and three individual defendants, William R. Brewer, Shirley A. Brewer and Charles F. Dorris, seeking damages for alleged breach of a contract to construct roads, install underground drainage lines and make other improvements in developing Lakewood Shores, near Oscoda, in Iosco County. ¹

Count I alleged a joint venture between defendants RRSB, UTV and Brewer to share in the performance and profits of the Conel contract, so as to make defendant RRSB liable for defaults under the contract. Count IV alleged defendant RRSB agreed to be surety for and to guarantee performance by UTV. Count V alleged defendant RRSB fraudulently misrepresented to plaintiff regarding defendants UTV and Brewer to induce plaintiff to enter into the original 1968 contract.

[84 MICHAPP 418] Upon these allegations and theories, plaintiff sought damages, both compensatory and punitive. Eventually, in 1975, the case against the three individual defendants was dismissed with prejudice by stipulation.

By stipulation, the case was divided into two jury trials, the first with respect to liability and, after the first jury found for plaintiff against defendant, RRSB, a second, in which a jury awarded plaintiff $800,000 in damages against both defendants RRSB and UTV. Defendant RRSB's motions for judgment notwithstanding the verdict after each verdict were denied by the trial judge in written opinions. Defendant RRSB now appeals as of right.

On appeal, defendant bank claims the trial court should have required a special verdict. The record indicates that defendant bank filed a written request for a special verdict. ²

GCR 1963, 514 affords the trial court discretion to require special verdicts and spells out the procedure for their application. Prior to adoption of the 1963 General Court Rules, Michigan permitted both general verdicts with special questions and the alternative special verdicts in lieu of a general verdict. GCR 1963, 514 eliminated authorization of general verdicts with special questions as a matter of right, but retained discretion in the trial judge to require a special verdict in which case there [84 MICHAPP 419] was no general verdict. ³ In this case, counsel for the parties expressly stipulated on the record, in open court, to take a general verdict rather than the special verdict defendant bank had earlier requested. ⁴ While this stipulation did not deprive the trial judge of his discretion to require a special verdict, it was in the nature of a bargain between the parties and became, when approved by the court, binding on both parties as a waiver of any objection they might have to the taking of a general verdict. ⁵

In his brief on appeal, counsel for defendant bank goes outside the record to assert the trial court "indicated it would absolutely not grant appellant's request for a special verdict under any circumstances". Apparently, counsel for defendant is attacking the enforceability of his own stipulation on the ground that he was making the best of a bad situation; namely, defense counsel believed the judge would deny his motion for special verdicts.[84 MICHAPP 420] This type of extra-judicial argument is deplorable. ⁶ If defense counsel wished to make this argument, he should have put his claim on the record in open court before the case went to the jury. Nothing in the record indicates defendant preserved for appeal an issue regarding a special verdict. No objection was made to the form of the verdict. Only after the jury rendered a verdict for plaintiff, did defendant raise this issue. Furthermore, the record does not indicate that there would have been an abuse of discretion if the trial court had denied a request for a special verdict. We reject this claim of defendant as being totally without merit.

Defendant bank claims it should not have been held liable under a contract which it did not sign. Defendant bank says that neither the plaintiff's theories of liability, namely, suretyship, joint venture or fraud, nor the evidence supporting these theories was sufficient to support the judgment. In this connection, defendant bank also claims that denial of its preliminary motions for accelerated judgment ⁷ and later, for summary judgment, ⁸ hampered and improperly defeated its efforts to defend against plaintiff's claims. From the record, it is not readily apparent as to who was the major culprit for the lengthy delay in bringing this case to trial. [84 MICHAPP 421] However, it is quite clear that this is another case where the parties discovered each other to death; certainly, the dreams of the professors that the great broadening of the discovery rules in 1963 would serve the cause of justice was not realized in this case. ⁹

The motion for accelerated judgment was based upon a claim that another similar action between the same parties was pending and a claim that the action was barred by the Statute of Frauds, citing GCR 1963, 116.1(5). Defendant bank accompanied its motion with a document entitled "Memorandum of Authorities, Fact and Argument in Support of Motion for Accelerated Judgment and Other Relief". This document, which is replete with argumentative adjectives, claims reliance upon M.C.L. §§ 566.132 and 566.135; M.S.A. §§ 26.922 and 26.924. Plaintiff denies that its claim contravened the Statute of Frauds and filed a memorandum supporting its position. Denial by the trial court of defendant's motion was not clearly erroneous.

Defendant bank's motion for summary judgment was accompanied by a brief and memorandum of authority. Plaintiff filed a reply memorandum of authority, which essentially asserted defendant's motion was an argument regarding the facts. The trial court held with plaintiff and denied the motion for summary judgment. We decline to find the trial court's ruling in denying the motion was clearly erroneous.

Defendant bank then filed one of several interlocutory[84 MICHAPP 422] motions for leave to appeal with the Court of Appeals, which motions were denied. ¹⁰

With respect to plaintiff's theory that defendant bank acted as a surety or guarantor, there was testimony which, if believed, supported such a conclusion. Defendant bank claims a writing was necessary if the suretyship issue was to be submitted to the jury. Based upon the Statute of Frauds, this claim was raised in defendant bank's July 17, 1974, interlocutory application for leave to appeal, which was denied by this Court.

However, in the present appeal as of right, the issue has been reduced to collateral status because of the general nature of the verdict and the possibility that the jury found for plaintiff on the basis of one or both of the alternative theories of liability. Nevertheless, we give consideration to the Statute of Frauds issue.

M.C.L. § 566.132(2); M.S.A. § 26.922(2) requires that every agreement to answer for the debt or default of another be in writing and signed by the party to be charged. The only writing in the within case evidencing a promise by the defendant bank was an introductory letter given by defendant bank to UTV president Brewer vouching for Brewer's character and integrity. Defendant RRSB argues that this letter alone can not satisfy the Statute of Frauds requirement for a surety arrangement.

To overcome the Statute of Frauds defense, plaintiff relies on an estoppel theory. Estoppel arises where a party, by representations, admissions or [84 MICHAPP 423] silence, intentionally or negligently induces another party to believe facts, and the other party justifiably relies and acts on this belief, and will be prejudiced if the first party is permitted to deny the existence of the facts. ¹¹ Where a plaintiff alleges estoppel to circumvent the Statute of Frauds, a question of fact is raised which must be resolved at trial by the trier of fact. ¹² The question on review becomes: Was there sufficient evidence, which, if believed by the trier of fact, would support a finding of estoppel sufficient to circumvent the Statute of Frauds?

Carl Brownell, president of plaintiff company, testified that he would not have proceeded with any agreement with UTV without a performance bond, had he not received assurances from defendant bank's vice president, Fay Wilber, as to the reliability of UTV as a contractor. After Brownell's telephone conversation with Wilber regarding UTV's president Brewer, Brownell immediately began contract negotiations with Brewer, culminating in the contract now in dispute. It also appears that another officer of the bank was actively participating in the running of UTV's financial operations. Brownell testified "They had Kassel running his business down below, coming up to collect the checks, issuing credit memos and Kassel told me that the bank really wanted him to have this job because of the money he would make off of it which would reduce the additional debt that he had with the bank which I didn't know he had of some $64,000.00 and everything all the people that I was...