Grigg v. Hanna

• Court: Michigan Supreme Court
• Writing for the Court: POTTER
• Citation: Grigg v. Hanna, 283 Mich. 443, 278 N.W. 125 (Mich. 1938)
• Decision Date: 25 February 1938
• Docket Number: No. 20. April Term, 1937.,20. April Term, 1937.
• Parties: GRIGG v. HANNA et al.

283 Mich. 443

278 N.W. 125

GRIGG

v.HANNA et al.

No. 20. April Term, 1937.

Supreme Court of Michigan.

Feb. 25, 1938.

Suit by Violet R. Grigg, administratrix of the estate of W. Herbert Grigg, deceased, against Anna Hanna, administratrix of the estate of Bert Hanna, deceased, and others to set aside proceedings in probate court, for discovery, accounting, injunction, and to impress a constructive trust on property and for other relief. From the decree, defendant Anna Hanna, administratrix of the estate of Bert Hanna, deceased, appeals, and the plaintiff cross-appeals from the decree dismissing bill of complaint as against the Detroit Trust Company and others.

Affirmed.

POTTER and CHANDLER, JJ., dissenting in part.Appeal from Circuit Court, Wayne County, in Chancery; Guy A. Miller, judge.

Argued before the Entire Bench.

Paul B. Moody, of Detroit (Arlo A. Emery, Lawhead & Kenny and Donald P. Kipp, all of Detroit, of counsel), for appellant.

William S. Peterson, of Detroit (Kenneth M. Stevens, of Detroit, of counsel), for appellee.

Miller, Canfield, Paddock & Stone, of Detroit, for cross-appellee Detroit Trust Co.

POTTER, Justice.

Plaintiff, as administratrix de bonis non with the will annexed of the estate of W. Herbert Grigg, deceased, filed a bill in equity against Anna Hanna, administratrix of the estate of Bert Hanna, deceased; the Detroit Trust Company, which had been appointed executor of the will of W. Herbert Grigg after his death; Richard Charles Hanna; Frances Esther Haar; and the Grigg-Hanna Box & Lumber Company, a corporation.

The bill of complaint charged that W. Herbert Grigg and Bert Hanna formed a partnership, known as the Grigg-Hanna Company, May 25, 1905, for a period of ten years; the partnership affairs were not wound up at the expiration of the contract period, but continued until the death of W. Herbert Grigg; W. Herbert Grigg entered into a partnership with Charles W. Leech and Bert Hanna, in the Charles W. Leech Lumber Company, February 1, 1908, which partnership was to expire January 31, 1913, but this partnership continued until February 26, 1931, when a new partner was admitted to the partnership and new articles of association executed by the parties thereto; June 26, 1920, W. Herbert Grigg and wife bought the Tireman avenue property of Bert Hanna and wife for $125,000, with $12,000 paid down and the balance to be paid monthly; June 26, 1920, W. Herbert Grigg borrowed from Bert Hanna a considerable sum of money and gave him a quitclaim deed of the Michigan avenue property, taking back a land contract to purchase it for $100,000, $15,000 of which was paid down; April 19, 1931, W. Herbert Grigg died, his will was admitted to probate, and April 29, 1931, the Detroit Trust Company was appointed executor of his will, and acted as such until October 3, 1933; July 8, 1932, the Detroit Trust Company filed a petition in the probate court to sell the Michigan avenue property and the Tireman avenue property, alleging the fee of the Michigan avenue property was worth $50,000, but, being subject to the contract of purchase above mentioned, the Grigg estate's interest therein was nothing; that the fee to the Tireman avenue property was worth $49,000, but, being subject to the land contract of purchase, the interest of the estate of W. Herbert Grigg therein was nothing, and that both properties were sold to Bert Hanna for a nominal consideration of $1 and deeded to him; September 2, 1932, the Detroit Trust Company, as executor, petitioned the probate court for an order authorizing it to sell the interest of the Grigg estate in the Grigg-Hanna Company, the one-half interest in the Grigg-Hanna Box Company, and the one-fourth interest of such estate in the Charles W. Leech LumberCompany, for $15,000, to Bert Hanna who agreed, in consideration of such sale, to release his claim against the Grigg estate which had been allowed by the commissioners in the probate court, and this was done. The bill of complaint charges that, though the Detroit Trust Company had on hand appraisals and statements made by Bert Hanna showing the Michigan avenue property was worth $150,000 and the Tireman avenue property was worth $125,000, it did not disclose that fact to the probate court, but permitted false and fraudulent affidavits of freeholders to be presented to the probate court showing the values of $50,000 and $49,000 respectively above referred to; that Bert Hanna presented and had allowed against the estate of W. Herbert Grigg a fictitious claim of $200,000 which it knew was false, and was guilty of gross neglect of duty and constructive fraud in not opposing it and disclosing the facts within its knowledge to the commissioners on claims, and that Bert Hanna was guilty of active fraud in presenting and procuring the allowance of such fictitious claim while occupying a fiduciary relation to the Grigg estate as surviving partner of W. Herbert Grigg; and that, in addition, the Detroit Trust Company was guilty of gross neglect of duty in not compelling Bert Hanna to account for the withdrawals of money from the Grigg-Hanna partnership after the death of W. Herbert Grigg and before the death of Bert Hanna, who died March 20, 1934.

April 11, 1934, Anna Hanna was appointed administratrix of the estate of Bert Hanna, deceased, and April 16, 1935, the bill of complaint herein was filed to set aside the proceedings in the probate court for discovery, accounting, injunction, and to impress a constructive trust on the property of the Grigg-Hanna Box & Lumber Company, and for other relief.

Defendant Detroit Trust Company, by way of answer, denied all the charges of gross negligence and fraud, either actual or constructive, against it; alleged the regularity of the probate proceedings in the W. Herbert Grigg estate, that the proceedings in the probate court were regular and constituted former adjudication; that, in the proceedings to remove the Detroit Trust Company and in passing upon its final account, the probate court passed upon and adjudicated the question of the propriety of the sales made by it and its conduct in relation thereto; and that all proceedings for the sale of the partnership interest in the Grigg estate property sold, and all proceedings in relation to the final account of the Detroit Trust Company, executor, were finally adjudicated against plaintiff and in favor of the Detroit Trust Company by the probate court of Wayne county, and may not be collaterally attacked. In addition, it set up various special defenses tending to show the regularity of its conduct, again insisting the decisive questions were res adjudicata.

Anna Hanna, administratrix of the estate of Bert Hanna, deceased, and the Grigg-Hanna Lumber & Box Company (above mentioned as Grigg-Hanna Box & Lumber Company), a corporation, filed a joint and several answer denying the substantive charges of plaintiff on which she claimed relief, and asserting the probate proceedings were res adjudicata.

Plaintiff, by way of answer to the affirmative matter set up in defendants' answers, says if the accounting allowed in the probate court, obtained by fraud, is permitted to stand, the Grigg estate would be insolvent, but avers the figures in defendants' answers were fraudulent representations to the probate court and avers the Grigg estate was not insolvent; alleges it was solvent in fact and, but for the fraudulent accounting of defendants, would be shown to be so; and denies the probate proceedings are res adjudicata.

The trial court, after hearing the testimony, filed exhaustive findings of fact, sustaining for the most part the claims made by plaintiff, but dismissing the bill as to Richard Charles Hanna and Frances Esther Haar, with costs against plaintiff; dismissing the bill of complaint against the Detroit Trust Company with prejudice to the right of plaintiff to ever again bring suit in law or in equity concerning any of the matters and things set forth in plaintiff's bill of complaint, but without costs; ordering an accounting and fixing the basis thereof; denying personal relief against the Grigg-Hanna Lumber & Box Company, but without prejudice to whatever legal lien may exist in favor of William Herbert Grigg, one of the partners of the Grigg-Hanna Company, a parthership, upon any partnership property which since the death of William Herbert Grigg had been taken over by the corporation; and referring the cause to a circuit court commissionerfor the determination of the value of the estate's interest in the Charles W. Leech Lumber Company as of April 4, 1932, the total amount of cash withdrawals by Bert Hanna between April 19, 1931, and April 4, 1932, from both partnerships, the balance due and actually owing by Mr. Grigg to Bert Hanna upon the land contract covering the Michigan avenue property, the true amount of any other sums Bert Hanna actually paid under the terms of the settlement with the Detroit Trust Company and which amounted to legal claims against the Grigg estate, all of which information was to be reported back to the trial court, together with a full and complete list of all the property, both real and personal, transferred by Bert Hanna from the Grigg-Hanna Company, a partnership, to the Grigg-Hanna Lumber & Box Company and still in the latter's possession, and a full and complete list of all property, real and personal, that was withdrawn or received from the Charles W. Leech Lumber Company, a partnership, and now in possession of the defendants Anna Hanna, administratrix, or Grigg-Hanna Lumber & Box Company, a corporation. Plaintiff was given costs.

By this decree, basis of the accounting was established as follows: (a) That the claim of Bert Hanna upon the Tireman avenue land contract be and the same is decreed to have been discharged by the cancellation of the land contract thereon, and the claim allowed by the commissioners thereon satisfied and discharged; (b) the value of the W. Herbert Grigg estate's...