Mathews v. Life Ins. Co. of Detroit

• Decision Date: 06 June 1938
• Docket Number: No. 20.,20.
• Citation: 279 N.W. 858,284 Mich. 352
• Parties: MATHEWS et al. v. LIFE INS. CO. OF DETROIT.
• Court: Michigan Supreme Court

284 Mich. 352

279 N.W. 858

MATHEWS et al.

v.LIFE INS. CO. OF DETROIT.

No. 20.

Supreme Court of Michigan.

June 6, 1938.

Suit by George W. Mathews and others against the Life Insurance Company of Detroit to have a foreclosure proceeding instituted by defendant against the 29 Collingwood Avenue Corporation held void on the ground that title to the mortgaged property had become vested in the stockholders of the corporation, and that they had not been made parties to the foreclosure suit.From a decree vacating the decree in the foreclosure suit, the defendant appeals.

Decree reversed and bill dismissed.

Appeal from Circuit Court, Wayne County, in Chancery; Mark D. Taylor, judge.

Argued before the Entire Bench.

Levin, Levin & Dill, of Detroit (Bayre Levin, Earlmont H. Dill, and Leo Yoedicke, all of Detroit, of counsel), for appellant.

Sempliner, Dewey, Stanton & Honigman, of Detroit (A. W. Sempliner and Leonard Horton, both of Detroit, of counsel), for appellees.

WIEST, Chief Justice.

The Twenty-Nine Collingwood Avenue Corporation, organized for profit, gave a mortgage on an apartment building in 1928.Thereafter, for failure to pay the annual franchise fee and file annual reports for two consecutive years, the charter of the corporation became ‘absolutely void, without any judicial proceeding whatsoever.’Sec. 91, ActNo. 327, Public Acts 1931.Nevertheless it continued for three years after loss of its charter to be a body corporate for the purpose of prosecuting and defending suits for, or against it and of enabling it, gradually, to settle and close its affairs and to dispose of and convey its property and divide its assets, but not for continuing its business.Sec. 75, Act.No. 327, Public Acts 1931.The two year default, rendering the charter void, was on August 31, 1932, and the three year period in which to settle its affairs expired August 31, 1935.

In August, 1936, a bill in equity was filed by defendant herein to foreclose the mortgage, with service of process upon James F. Fisher, the last elected secretary of the mortgagor corporation, and Mathew & Fisher, Inc., the management agent of the Detroit Trust Company, claimant of an alleged interest.

A joint answer was filed in behalf of the mortgagor corporation and Mathews & Fisher, Inc., and on January 21, 1937, decree of foreclosure was entered and sale had thereunder on April 14, 1937, with the mortgagee the purchaser for the full amount under the decree.Thereupon plaintiffs, former directors and stockholders of the defunct corporation, filed the bill herein to have the foreclosure proceeding held void, on the ground that, by operation of law, title to the mortgaged property had become vested in the stockholders of the defunct corporation and they were necessary parties to the foreclosure suit and had not been made such, nor had they been brought in by the process required by Comp.Laws 1929, § 14031.

Plaintiffs also claim that, the mentioned three year period having expired, no suit could be brought against the corporation.

Defendant prosecutes review of the decree vacating the decree in the foreclosure suit.

Plaintiffs herein do not attack the validity of the mortgage and the lien thereof, and admit that it may be foreclosed by advertisement.

Inasmuch as the mortgagee bid the full amount due on the mortgage and plaintiffs do not question the right to have foreclosure, make no tender of payment and allege no prejudice, it looks like an instance of damnum absque injuria but, if plaintiffs were necessary parties, by reason of vesting of title in the stockholders and the process employed did not summon them, they are entitled to have the court pass on the legal question presented.

In the foreclosure suit service of process was made on the last elected secretary of the corporation.This was good and sufficient service if...