Fred Gibbs, Inc. v. Old Colony Ins. Co.

• Decision Date: 15 February 1971
• Docket Number: Docket No. 5208,No. 2,2
• Citation: 30 Mich.App. 352,186 N.W.2d 396
• Parties: FRED GIBBS, INC., a Michigan corporation, Plaintiff-Appellant, v. OLD COLONY INSURANCE COMPANY, a Massachusetts corporation; Phil Flint Oil Company, a Michigan corporation; The Travelers Insurance Company, a Massachusetts corporation; General Adjustment Bureau, a Michigan corporation; Robert Tatham and Herbert M. Eiges, Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 396

186 N.W.2d 396

30 Mich.App. 352

FRED GIBBS, INC., a Michigan corporation, Plaintiff-Appellant, v. OLD COLONY INSURANCE COMPANY, a Massachusetts corporation;

Phil Flint Oil Company, a Michigan corporation; The

Travelers Insurance Company, a Massachusetts corporation;

General Adjustment Bureau, a Michigan corporation; Robert

Tatham and Herbert M. Eiges, Defendants-Appellees.

Docket No. 5208.

Court of Appeals of Michigan, Division No. 2.

Feb. 15, 1971.

Released for Publication May 3, 1971.

Wilfred A. Dupuis, Portland, for plaintiff-appellant.

Kenneth C. Davies, Detroit, for defendants-appellees.

Before QUINN, P.J., and BRONSON and O'HARA ^*, JJ.

O'HARA, Judge.

What may be loosely characterized as a comedy of errors began with a misdelivery in which any action or proceeding is called 'Flint') to plaintiff's clothing store and culminated in the subsequent explosion of the tank containing the oil, with resultant damage to plaintiff's merchandise.

Thereafter, plaintiff instituted an action against Flint and a $25,000 settlement was purportedly made.

Plaintiff subsequently sought further relief against Flint, Old Colony Insurance Company (hereinafter called 'Colony'), The Travelers Insurance Company (hereinafter called 'Travelers'), General Adjustment Bureau (hereinafter called 'General'), and Robert Tatham and Herbert M. Eiges.

Allegations were made in Count I that Colony, its adjusting agent General, Robert Tatham, an attorney whom plaintiff had engaged to represent it in seeking redress, and Travelers, which represented Flint, had defrauded plaintiff with regard to the sum payable under plaintiff's policy of insurance with Colony.

In Count II, plaintiff contended that an attorney, one Herbert M. Eiges, whom it had subsequently employed following dismissal of Mr. Tatham as its counsel, had entered into a collusive settlement with Flint and Travelers, which was imposed on plaintiff contrary to its desires and best interest.

The appeal lies solely from the actions taken by the trial judge in proceedings relating to Count I.

In his opening statement plaintiff's attorney indicated that he wished to withdraw all allegations against Flint and Travelers. In furtherance of that purpose, he requested permission to delete paragraph 26 of Count I from his amended complaint. The court allowed the amendment. However, as a consequence of the amendment, the trial judge also dismissed the action against the other defendants on the ground that the remaining portions of Count I did not establish fraud as to them, and that all other causes of action were barred by the running of the statute of limitations.

Whereupon, plaintiff moved for leave to amend the complaint to reinstate allegations of fraud as to the last-mentioned defendants. Leave to amend was denied on the ground that the motion was not timely made. From denial of his motion to amend, plaintiff appeals.

The sole issue raised on appeal is whether the trial court erred in denying plaintiff leave to amend the complaint to reinstate allegations of fraud and collusion as to defendants Colony, General, and Robert Tatham.

Pursuant to GCR 1963, 118.1 and its statutory counterpart, M.C.L.A. § 600.2301 (Stat.Ann.1962 Rev. § 27A.2301), ¹ the granting or refusal of permission to amend pleadings rests in the sound discretion of the trial judge and, on appeal, the ruling will not be disturbed in the absence of abuse. Scott v. Cleveland (1960), 360 Mich. 322, 103 N.W.2d 631; Hardaway v. Consolidated Paper Company (1962), 366 Mich. 190, 114 N.W.2d 236, 256; Graham v. Thorman (1958), 354 Mich. 629, 93 N.W.2d 264.

Both the applicable statute and court rule evidence a policy favoring liberal amendment of pleadings as long as it does not prejudicially affect substantial rights. Phillips v. Rolston (1965), 376 Mich. 264, 137 N.W.2d 158; Blissfield Community Schools District v. Strech (1956), 346 Mich. 186, 77 N.W.2d 785.

Our prior decisions limited the exercise of judicial discretion by the requirement of a finding that justice will not be served by...