Klimmer v. Klimmer, Docket No. 23553

• Decision Date: 10 December 1975
• Docket Number: Docket No. 23553
• Citation: 238 N.W.2d 586,66 Mich.App. 310
• Parties: Eithel KLIMMER, Plaintiff-Appellee, v. Gerald KLIMMER, Defendant, and Barbara Klimmer, Defendant-Appellant. 66 Mich.App. 310, 238 N.W.2d 586
• Court: Court of Appeal of Michigan — District of US

Page 586

238 N.W.2d 586

Eithel KLIMMER, Plaintiff-Appellee, v. Gerald KLIMMER, Defendant and Barbara Klimmer, Defendant-Appellant.

Docket No. 23553.

66 Mich.App. 310, 238 N.W.2d 586

Court of Appeals of Michigan.

Dec. 10, 1975.

Released for Publication March 2, 1976.

[66 MICHAPP 310] Dajos & Goodwin by Benjamin W. Dajos, Jr., Coldwater, for defendant-appellant.

Jereck & Stiner by John M. Jereck, Battle Creek, for plaintiff-appellee.

Before T. M. BURNS, P.J., and V. J. BRENNAN and CAVANAGH, JJ.

CAVANAGH, Judge.

Defendant Barbara Klimmer[66 MICHAPP 311] appeals from an order granting partial summary judgment for plaintiff.

On May 2, 1974, plaintiff sued her son, Gerald Klimmer, and his wife, Barbara Klimmer, for $12,000 allegedly loaned to them, plus itnerest. The complaint alleged that on or about December 31, 1962, plaintiff loaned the defendants $7,000, which had not been repaid. A copy of a promissory note for that amount, plus interest, signed by both Gerald and Barbara Klimmer was attached to the complaint.

On June 10, 1974, defendant Barbara Klimmer answered and denied having borrowed any money whatsoever from plaintiff and denied having borrowed $7,000 or any other amount on or about December 31, 1962. She admitted that she signed the promissory note at the request of her husband. She alleged, however, that neither she nor Gerald Klimmer received any consideration for the note.

On July 2, 1974, defendant Gerald Klimmer was defaulted. Plaintiff then moved for partial summary judgment as to the $7,000 note on the grounds that defendant Barbara Klimmer had failed to state a valid defense to the plaintiff's claim with respect to the note, GCR 1963, 117.2(2). Defendant Barbara Klimmer responded that, although defendants signed the note, no consideration was received by either defendant and that lack of consideration stated a valid defense to plaintiff's claim on the note.

In a written opinion the trial court granted plaintiff partial summary judgment. With regard to the defense of lack of consideration, the court found defendant Barbara Klimmer bound by the default judgment taken against Gerald Klimmer:

'* * * Barbara Klimmer does not deny signing the [66 MICHAPP 312] note, however, she claims that she did not receive any consideration for her signature, and she further claims that her husband at the time, Gerald Klimmer, didn't receive any consideration. Gerald Klimmer did not file an appearance in the case and a default judgment has been taken against him.

'It is my opinion that the partial summary judgment should be granted. Gerald Klimmer has been defaulted which this Court accepts as an admission of liability on his part. Barbara Klimmer cannot claim that Gerald Klimmer did not receive any consideration because of the admission. Her claim that she only signed with her husband and received no consideration herself is, also, not a defense (see City Finance Co. v. Kloostra, 47 Mich.App. 276 (209 N.W.2d 498)).'

On appeal defendant Barbara Klimmer argues that she stated a valid defense to plaintiff's claim, that the default judgment against codefendant Gerald Klimmer did not result in admissions binding against her, and that therefore the partial summary judgment was improper. We agree.

Plaintiff moved for summary judgment on the basis of GCR 1963, 117.2(2), failure to state a valid defense. Clearly Barbara Klimmer stated a valid defense. In a suit on a promissory note, lack or failure of consideration is a good defense against any person not a holder in due course. 1905 P.A. 265, § 30 (M.C.L.A. § 439.30; M.S.A. § 19.70), repealed 1962 P.A. 174, § 9992 (M.C.L.A. § 440.9992; M.S.A. § 19.9992); now see M.C.L.A. § 440.3408; M.S.A. § 19.3408. ¹ Furthermore, although the default judgment against Gerald Klimmer may operate against him as an admission of liability, Barbara Klimmer can [66 MICHAPP 313] nevertheless claim that Gerald Klimmer did not receive any consideration. An admission predicated upon a default only operates against the particular party who defaults; it does not bind a codefendant who appears and contests the litigation. 47 Am.Jur.2d, Judgments, § 1195, p. 212. Cf. City Finance Co. v. Baldwin, 326 Mich. 174, 40 N.W.2d 107 (1949) (defendant not bound by admissions in answer of codefendant). Thus, it was error for the trial court to grant summary judgment for failure to state a valid defense.

Traverse City State Bank v. Conaway, 37 Mich.App. 647, 195 N.W.2d 288 (1972), and City Finance Co. v. Kloostra, 47 Mich.App. 276, 209 N.W.2d 498 (1973), do not control the issue on appeal here nor do they necessarily control the ultimate disposition of the case. In Conaway the issue was whether or not the wife was liable. There the husband and wife both signed a note in return for a loan. All of the money was to be used in a business operated exclusively by the husband. The husband was subsequently adjudged bankrupt and individually discharged. Plaintiff sued on the note asking for a joint judgment with execution restricted to entireties and joint property. The trial court dismissed the suit, apparently on the grounds that the wife was not liable because she received no separate consideration nor did she pledge her separate estate. On the authority of M.C.L.A. § 557.51 Et seq.; M.S.A. § 26.181 Et seq., this Court reversed the trial court and held that the wife was jointly liable and that judgment should have been entered against the husband and wife jointly with execution limited to...