In re Hudson

• Decision Date: 17 March 1942
• Docket Number: No. 50.,50.
• Citation: 301 Mich. 77,3 N.W.2d 17
• Parties: In re HUDSON et al. Appeal of AMERICAN HARDWOOD FLOORING CO. et al.
• Court: Michigan Supreme Court

301 Mich. 77

3 N.W.2d 17

In re HUDSON et al. Appeal of AMERICAN HARDWOOD FLOORING CO. et al.

No. 50.

Supreme Court of Michigan.

March 17, 1942.

Proceedings in the matter of the petition of William R. Hudson and others, directors of the Hudson Lumber Company, for its dissolution. From an order granting a rehearing on various phases of the receivers' account, after decree surcharging receivers on hearing on their final account, and from an order vacating an order denying two of the motions for rehearing, American Hardwood Flooring Company and others, objecting creditors, appeal.

Orders appealed from vacated, canceled and held for naught.

Appeal from Circuit >>Appeal from Circuit Court, Wayne County, in Chancery; George B. Murphy, Judge.Before the Entire Bench, except WIEST, J.

Edmund M. Sloman, of Detroit, for appellant.

Wm. S. McDowell, of Detroit, for permanent receiver appellees.

Herbert C. Munro, of Detroit, for Wm. R. Hudson.

CHANDLER, Chief Justice.

Matters relating to the receivership of the Hudson Lumber Company have been before this court in Re Hudson, 258 Mich. 176, 241 N.W. 868;In re Hudson, 266 Mich. 274, 253 N.W. 295; and In re Hudson, 278 Mich. 699, 271 N.W. 576.

On November 29, 1940, the Honorable Frank Day Smith, one of the circuit judges in and for the County of Wayne, entered a decree in this cause whereby he made certain findings of fact and surcharged the receivers upon hearing on their final account in a sum in excess of $34,000. On December 18, 1940, three motions for rehearing were filed, one by William S. McDowell as attorney for the permanent receivers; one by Raymond W. LaBar as attorney for William S. McDowell, counsel for the permanent receivers; and one by William R. Hudson personally and as one of the receivers.

The first two motions were noticed for hearing before Judge Smith on December 27, 1940, and were denied by an order entered by him on December 31, 1940. The third motion mentioned was noticed for hearing before the presiding judge on January 10, 1941, subsequent to the expiration of the term of office of Judge Smith, and the same was assigned for hearing before Judge George B. Murphy, the successor in office to Judge Smith. When said motion came on for hearing, Judge Murphy stated:

‘The Court: The court is a personal friend of William R. Hudson. I have known him personally for over 20 years, and knew him when he was one of the principal stockholders and assistant manager of Hudson Lumber Company. I knew his brother, Ben, well. Mr. Hudson visits my home and I often his. For that reason-this case has been through the courts for the last 20 years-I don't believe I would be an impartial judge, because I have known William Hudson all those years very favorably. I would rather have somebody else sit in that case. I have often heard him talk about the case, although nothing about the real details of it, but it was in and out of the supreme court for so many years, so I would have to refer this case to the presiding judge.

‘Mr. Munro: I see.

‘The Court: I don't see how I could act in the case.

‘Mr. McDowell: I can understand it. I appreciate it, your honor.

‘Mr. Sloman: May we have the praecipe in that matter then?

‘Mr. Munro: I wish Judge Smith had as good an opinion of Mr. Hudson as you have.

‘Mr. McDowell: He was biased in his opinion and didn't listen to the facts.'

The settled record recites the following facts as having thereafter transpired:

‘The Honorable George B. Murphy thereupon handed the motion praecipe to one of the attorneys and directed them to advise the presiding judge of the facts and that they request him to assign said motion to some other circuit judge to hear.

‘Thereupon Edmund M. Sloman, Herbert C. Munro and William S. McDowell, attorneys, went to the court room of the presiding judge, the Honorable Ira W. Jayne, and advised him as to what had taken place in Judge Murphy's court; thereupon the presiding judge advised counsel that under the local rule then in effect, he would have to refer the matter back to Judge Murphy, who could, if he saw fit to do so, arrange with another circuit judge to hear the matter; he stated that he would speak to Judge Murphy and acquaint him with the procedure, and advised him that unless he found himself disqualified he could proceed with the same.

‘Counsel thereupon returned to Judge Murphy's court room and advised said circuit judge as to the statement of the presiding judge, whereupon the court advised counsel that the matter would have to be held in abeyance until he could talk with Judge Jayne to determine how the matter could be handled.

‘That thereupon, on the 17th day of January, 1941, said William R. Hudson and S. Seymour Rutherford, permanent receivers, by William S. McDowell, their attorney, filed in said cause a motion to vacate the original order of December 31st, 1940, noticing said motion for hearing before the Honorable George B. Murphy on the morning of January 20th, 1941. That on January 20th, 1941, said William S. McDowell, Herbert C. Munro and Edmund M. Sloman appeared before said court. That when said motion was reached, the said Edmund M. Sloman, on behalf of all objecting creditors, objected to the hearing of said motion by said circuit judge, presenting and filing in open court an affidavit...