Dimmitt & Owens Financial, Inc. v. Realtek Industries, Inc.

• Decision Date: 08 February 1979
• Docket Number: Docket No. 77-4547
• Citation: 90 Mich.App. 429,280 N.W.2d 827
• Parties: , 27 UCC Rep.Serv. 302 DIMMITT & OWENS FINANCIAL, INC., a Michigan Corporation, Plaintiff-Appellee, v. REALTEK INDUSTRIES, INC., a Foreign Corporation, Defendant-Appellant, and Art Clover and Art Clover, d/b/a Art Clover Masonry Contractor, Defendants.
• Court: Court of Appeal of Michigan — District of US

Page 827

280 N.W.2d 827

90 Mich.App. 429, 27 UCC Rep.Serv. 302

DIMMITT & OWENS FINANCIAL, INC., a Michigan Corporation Plaintiff-Appellee, v. REALTEK INDUSTRIES, INC., a Foreign Corporation, Defendant-Appellant and Art Clover and Art Clover, d/b/a Art Clover Masonry Contractor, Defendants.

Docket No. 77-4547.

Court of Appeals of Michigan.

Feb. 8, 1979.

Released for Publication July 12, 1979.

Tucker & Barbour by James A. Tucker, Detroit, for defendant-appellant.

Hugh L. Fisher, Patrick M. Griffin, Birmingham, for Dimmitt & Owens.

Art Clover, in pro per.

Before BEASLEY, P. J., and BRONSON and KAUFMAN, JJ.

PER CURIAM.

This action is based on an alleged assignment of accounts receivable by defendant Clover to plaintiff Dimmitt & Owens Financial, Inc. Defendant Realtek Industries, Inc., the account debtor, had a judgment entered against it and in favor of plaintiff-assignee in a bench trial. Defendant Realtek now appeals as of right.

Defendant first contends that the lower court committed reversible error in determining that Realtek was estopped from asserting defenses arising out of its contract with Clover against Dimmitt & Owens. Specifically, Realtek contends that M.C.L. § 440.9318(1); M.S.A. § 19.9318(1) precludes application of the principles of common law estoppel. That section provides that unless an account debtor has made an enforceable agreement to waive its defenses against the assignor, the rights of the assignee are subject to those defenses.

M.C.L. § 440.1103; M.S.A. § 19.1103 expressly preserves the doctrine of estoppel unless displaced by the particular provisions of the act. We do not find that § 9318(1) displaces common law estoppel principles. See 1 Anderson's Uniform Commercial Code (2d ed.), § 1-103:31, p. 29.

Defendant next contends that even if estoppel applies, the trial court's finding of estoppel on the facts of the instant case was against the great weight of the evidence. We disagree.

Estoppel arises where 1) a party, by representations, admissions or silence, intentionally or negligently induces another party to believe facts, 2) the other party justifiably relies and acts on this belief, and 3) the other party will be prejudiced if the first party is permitted to deny the existence of the facts. Conel Development, Inc. v. River Rouge Savings Bank, 84 Mich.App. 415, 422-423, 269 N.W.2d 621 (1978).

In the case at bar, acknowledgments signed by Realtek's executive vice-president, Donald Horace, and vice-president, Donald Hedinger, before plaintiff's purchase of the accounts, stated that the amounts due were just and correct, not contingent upon the fulfillment of any obligation, past or future, on the part of Clover, and that Realtek agreed that such amounts were due and owing and approved and allowed the same. Hedinger testified that he knew that after he had signed the agreement that plaintiff would pay Clover. Horace testified that he had signed the acknowledgment because Clover had done the amount of labor represented by the invoice, and that he needed Clover to continue the job and he knew that Clover did not have enough money to pay his materialmen. Checks totalling the amount of the purchase price of the accounts were introduced at trial. Dimmitt & Owens' president, Clifford Dimmitt, testified that these checks were made out in the amounts due individual suppliers pursuant to an agreement with Hedinger. In addition, Dimmitt testified that the checks were presented to Hedinger, who in turn gave them to Clover.

We conclude there was more than sufficient evidence from which the trial court could have found that Realtek was estopped to deny liability. This Court will not substitute its judgment for that of the trial court in matters involving credibility. See Rix v. O'Neil, 366 Mich. 35, 42-43, 113 N.W.2d 884 (1962).

Likewise, we conclude there was sufficient evidence to support the trial court's finding of authority on the part of Hedinger and Horace to execute the acknowledgments. In Massachusetts Bonding & Ins. Co. v. Transamerican Freight Lines Inc., 286 Mich. 179, 192, 281 N.W. 584 (1938), in determining whether a vice-president and manager of a regional office had authority to enter into an agreement, the Court quoted from 2 Fletcher, Cyclopedia Corporations (Perm. Ed.), p. 606:

"An officer or agent of a private corporation, intrusted with the general management and control of its business and affairs, has implied or apparent authority to do acts or make any contracts in its behalf falling within the scope of the ordinary and usual business of the company, and limitations and restrictions placed upon his express or implied authority, of which persons dealing with him have neither actual nor constructive notice, will not serve to restrict such powers to the prejudice of innocent third persons."

See also Maryland Casualty Co. v. Moon, 231 Mich. 56, 62, 203 N.W. 885 (1925), Smith, Hinchman & Grylls Associates, Inc. v. City of Riverview, 55 Mich.App. 703, 706, 223 N.W.2d 314 (1974), Lv. den. 393 Mich. 804 (1975).

In the instant case, the court could well have found from the evidence that the executions of the acknowledgments were in the ordinary and usual business of the company, and that plaintiff was justified in assuming that defendant's officers were authorized to perform this particular act in behalf of the...