George Morris Cruises v. Irwin Yacht & Marine Corp.

• Decision Date: 07 October 1991
• Docket Number: Docket No. 106207
• Court: Court of Appeal of Michigan — District of US
• Parties: GEORGE MORRIS CRUISES, C. William Garratt, and John W. Unger, Plaintiffs-Appellants, v. IRWIN YACHT & MARINE CORPORATION, Ted Irwin, Inc., Irwin Competition Yachts, Ted Irwin and Torresen Marine, Inc., Defendants-Appellees. 191 Mich.App. 409, 478 N.W.2d 693

Page 693

478 N.W.2d 693

GEORGE MORRIS CRUISES, C. William Garratt, and John W Unger, Plaintiffs-Appellants, v. IRWIN YACHT & MARINE CORPORATION, Ted Irwin, Inc., Irwin Competition Yachts, Ted Irwin and Torresen Marine Inc., Defendants-Appellees.

Docket No. 106207.

191 Mich.App. 409, 478 N.W.2d 693

Court of Appeals of Michigan.

Submitted May 9, 1989, at Lansing.

Decided Oct. 7, 1991, at 9:30 a.m.

Released for Publication Feb. 3, 1992.

[191 MICHAPP 410] Garratt, Morris & Evans, P.C. by C. William Garratt, Bloomfield Hills, for George Morris Cruises, C. William Garratt, and John W. Unger.

Reynolds, Beeby, Magnuson & Kenny, P.C. by Thomas G. Grubba, Detroit, for Irwin Yacht & Marine Corp., Ted Irwin, Inc., Irwin Competition Yachts, and Ted Irwin.

Butzel Long Gust Klein & Van Zile by Richard E. Rassel and J. Michael Huget, Detroit, for Torresen Marine, Inc.

Before McDONALD, P.J., and MARK J. CAVANAGH and REILLY, JJ.

[191 MICHAPP 411] REILLY, Judge.

Plaintiffs appeal as of right from an order granting the defendants' motion for summary disposition and dismissing the plaintiffs' complaint with prejudice on the grounds that the action was barred by M.C.L. Sec. 449.106; M.S.A. Sec. 20.118. We affirm in part, reverse in part, and remand for further proceedings.

Plaintiffs George Morris Cruises, C. William Garratt, and John W. Unger commenced the instant action in June 1987. According to a filed affidavit, George Morris Cruises is a Delaware partnership comprised of individual plaintiffs C. William Garratt and John W. Unger. In their first amended complaint, the plaintiffs alleged that on June 11, 1981, they acquired a forty-foot "Irwin Citation" sailboat that was designed and manufactured by defendants Irwin Yacht & Marine Corporation, Ted Irwin, Inc., Irwin Competition Yachts, and Ted Irwin and partially assembled and serviced by defendant Torresen Marine, Inc. The complaint alleged that the defendants "violated the Michigan Consumer Protection Act, and other, related contractual obligations, duties, [and] undertakings to plaintiffs[.]"

Defendant Torresen responded to the complaint by bringing a motion for summary disposition pursuant to MCR 2.116(C)(5), contesting the plaintiffs' standing to bring suit. The Irwin defendants later joined in the motion. At a hearing on November 12, 1987, the trial court granted the motion, holding that plaintiffs' failure to file a certificate of copartnership on behalf of George Morris Cruises barred them from bringing the instant action. After the trial court's ruling, but before an order of dismissal was entered, the plaintiffs filed the necessary certificate of copartnership with the Antrim County Clerk, stating on the face of the certificate that "George Morris Cruises is not conducting[191 MICHAPP 412] or carrying on and has not conducted or carried on business within the meaning of MCL 449.101 et seq. [M.S.A. Sec. 20.111 et seq. ] or 600.721 et seq. [M.S.A. Sec. 27A.721 et seq. ]." A dispute arose concerning the scope of the trial court's November 12 bench ruling, including the issue whether plaintiffs properly cured the defect in standing by filing a certificate of copartnership before an order of dismissal was entered. Consequently, another hearing was held on January 4, 1988, following which the trial court dismissed the plaintiffs' complaint with prejudice. Plaintiffs now appeal as of right, raising several issues. ¹

M.C.L. Sec. 449.101; M.S.A. Sec. 20.111 (hereinafter referred to as Sec. 1) provides in pertinent part:

No 2 or more persons shall hereafter be engaged in carrying on any business as copartners unless such persons shall first make and file with the county clerk of the county in which such copartnership business is or shall be located, a certificate in writing ... setting forth the full name of each and every person composing the said copartnership[.]

Further, M.C.L. Sec. 449.106; M.S.A. Sec. 20.118 (hereinafter referred to as Sec. 6), provides in pertinent part:

Any 2 or more persons owning, carrying on or conducting or transacting business as aforesaid, [191 MICHAPP 413] who shall fail to comply with the provisions of this act, shall each be guilty of a misdemeanor Provided, however, The fact that a penalty is provided herein for noncompliance with the provisions of this act shall not be construed to avoid contracts, but any copartnership failing to file the certificate or renewal certificate required by this act shall be prohibited from bringing any suit, action or proceeding in any of the courts of this state until after full compliance with the provisions of this act. [Emphasis added.]

A defense that a partnership is barred from bringing suit because of failure to file a certificate of copartnership may be asserted by bringing a motion for summary disposition pursuant to MCR 2.116(C)(5), lack of legal capacity to sue. See Thomas Industries, Inc v. Wells, 403 Mich. 466, 469, 270 N.W.2d 98 (1978). In reviewing such a motion, a court must consider the affidavits, together with the pleadings, depositions, admissions, and documentary evidence filed in the action or submitted by the parties. MCR 2.116(G)(5). Summary disposition is proper if the pleadings show that a party is entitled to judgment as a matter of law, or if the affidavits or other proofs show that there is no genuine issue of material fact. MCR 2.116(I)(1).

I

We begin by addressing the assertions of individual plaintiffs Garratt and Unger, who contend that they have standing to maintain individual actions regardless of whether a certificate of copartnership was required to be filed on behalf of the partnership. We disagree.

Defendants presented documentary evidence showing that the sailboat was purchased solely in the name of the partnership, George Morris [191 MICHAPP 414] Cruises. For purposes of litigation, a partnership is considered a separate entity. Yenglin v. Mazur, 121 Mich.App. 218, 224, 328 N.W.2d 624 (1982). Neither Garratt nor Unger have identified any facts showing how they possess an individual claim independent of that of the partnership. Moreover, while M.C.L. Sec. 600.2051(2); M.S.A. Sec. 27A.2051(2) permits a partnership claim to be brought in the name of the partnership or the individual partners designated as such, neither Garratt nor Unger are designated in the present action as partners. We note that even if Garratt and Unger had been so designated, their standing to sue would be no greater than that of the partnership itself. As agents of the partnership, see M.C.L. Sec. 449.9; M.S.A. Sec. 20.9, they would possess the power to do only those things that the partnership itself could do; therefore, if the partnership lacked the capacity to sue, so would they as its agents. Birch Run Nursery v. Jemal, 52 Mich.App. 23, 25, 216 N.W.2d 488 (1974), rev'd in part on other grounds393 Mich. 775, 224 N.W.2d 282 (1974).

We do not find Johnson v. Englebertson, 232 Mich. 518, 205 N.W. 604 (1925), cited by plaintiffs, to be supportive of the contention that Garratt and Unger are entitled to maintain individual actions. In Johnson, an equally divided Supreme Court, relying on an earlier decision in Rossello v. Trella, 206 Mich. 20, 172 N.W. 420 (1919), affirmed a trial court decision permitting partners to maintain a contract action in their individual capacities despite the fact that a certificate of copartnership had not been filed. ² However, unlike the situation in the instant case, the contracts involved in Johnson and Rossello were signed by the plaintiffs in their individual names, with no reference made in the contracts to the partnership. Thus, because the [191 MICHAPP 415] present case involves a contract in the partnership name, rather than a contract made individually, neither Johnson norRossello is controlling.

Accordingly, because neither Garratt nor Unger brought the instant action in their capacity as partners, and because they have not otherwise shown how they possess individual claims independent of that of the partnership, we conclude that summary disposition was properly granted with respect to their claims.

We also find without merit the contention that the trial court abused its discretion in denying the individual plaintiffs leave to amend their complaint to allege more clearly that they were bringing the instant action "both individually and as partners." Because the individual plaintiffs have not shown how they possess individual claims independent of that of the partnership, because the present action has already been brought in the partnership name, and because the individual plaintiffs would not possess any rights greater than those of the partnership itself had they brought the instant action as designated partners, such an amendment would have been futile. Atlanta International Ins. Co. v. Bell, 181 Mich.App. 272, 275, 448 N.W.2d 804 (1989).

II

We now turn to the issue whether summary disposition was properly granted with respect to the claim of the partnership, George Morris Cruises. Given our prior disposition of the individual plaintiffs' claims, all future references in this opinion to plaintiff shall be deemed to refer only to the partnership, unless a contrary indication is provided.

Plaintiff raises several arguments in support of [191 MICHAPP 416] its claim that summary disposition was improperly granted. First, plaintiff argues that it did not carry on business or maintain a business office in Michigan and therefore was not subject to the filing requirements of Sec. 1. Alternatively, plaintiff argues that if it was subject to the filing requirements, the trial court nevertheless erred in dismissing the lawsuit once the defect in standing was cured with the filing of a partnership certificate. Plaintiff further argues that even if dismissal was warranted, the trial court erred in dismissing the lawsuit with prejudice.

Regarding plaintiff's first argument, we agree that Sec. 1 does not require the filing of a certificate...