Michigan Nat. Bank v. Mudgett

• Decision Date: 30 August 1989
• Docket Number: Docket No. 105646
• Citation: Michigan Nat. Bank v. Mudgett, 444 N.W.2d 534, 178 Mich.App. 677 (Mich. App. 1989)
• Parties: MICHIGAN NATIONAL BANK, Plaintiff-Counter-Defendant-Appellee, v. Donald C. and Helen MUDGETT, jointly and severally, Defendants-Counter-Plaintiffs, Appellants, and Precision Wiring, Inc., a Michigan corporation, Defendant-Counter-Plaintiff.
• Court: Court of Appeal of Michigan

Page 534

444 N.W.2d 534

178 Mich.App. 677

MICHIGAN NATIONAL BANK, Plaintiff-Counter-Defendant-Appellee, v. Donald C. and Helen MUDGETT, jointly and severally Defendants-Counter-Plaintiffs, Appellants and Precision Wiring, Inc., a Michigan corporation Defendant-Counter-Plaintiff.

Docket No. 105646.

Court of Appeals of Michigan.

Submitted Jan. 11, 1989.

Decided April 10, 1989.

Released for Publication Aug. 30, 1989.

Varnum, Riddering, Schmidt & Howlett by Thomas A. Hoffman, Grand Rapids, for plaintiff-counter-defendant-appellee.

James J. Kobza, Muskegon, for defendants-counter-plaintiffs, appellants.

Before WEAVER, P.J., and HOLBROOK and BRENNAN, JJ.

PER CURIAM.

Defendants-counterplaintiffs Donald C. and Helen Mudgett appeal as of right from the December 9, 1987, order of the Muskegon Circuit Court dismissing their counterclaim against plaintiff. We affirm.

Defendants first argue that the trial court erred by granting, after reconsideration, plaintiff's motion for summary disposition on the basis that defendants did not have standing to file a counterclaim against plaintiff.

Plaintiff moved for summary disposition against defendants on their counterclaim under MCR 2.116(C)(8), on the basis that, inter alia, defendants lacked standing to sue. The trial court originally denied plaintiff's motion on the issue of standing, but later granted summary disposition on that issue after reconsideration.

A motion for summary disposition under MCR 2.116(C)(8) tests the legal basis of the complaint, not whether it can be factually supported. All of the factual allegations of the complaint are taken as true, together with any inferences or conclusions which may be fairly drawn from them. Unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover, the motion should be denied. Stebbins v. Concord Wrigley Drugs, Inc., 164 Mich.App. 204, 215, 416 N.W.2d 381 (1987).

An action must be prosecuted in the name of the real party in interest. MCR 2.201(B). A real party in interest is one who is vested with the right of action on a given claim, although the beneficial interest may be in another. Stillman v. Goldfarb, 172 Mich.App. 231, 237, 431 N.W.2d 247 (1988). This standing doctrine recognizes that litigation should be begun only by a party having an interest that will assure sincere and vigorous advocacy. Id.

In general, a suit to enforce corporate rights or to redress or prevent injury to the corporation, whether arising out of contract or tort, must be brought in the name of the corporation and not that of a stockholder, officer or employee. Grosslight v. Butts, 3 Mich.App. 51, 141 N.W.2d 657 (1966); Warren v. Manufacturers National Bank of Detroit, 759 F.2d 542 (C.A. 6, 1985); Schaffer v. Universal Rundle Corp, 397 F.2d 893 (C.A. 5, 1968); 7 Michigan Law and Practice, Corporations, Sec. 231, p. 191; 9A Fletcher, Cyclopedia Corporations (Perm ed), Sec. 4469, pp. 60-62.

The general rule is inapplicable where the individual shows a violation of a duty owed directly to him. Schaffer, supra, at p. 896. This exception does not arise, however, merely because the acts complained of resulted in damage both to the corporation and to the individual, but is limited to cases where the wrong done amounts to a breach of duty owed to the individual personally. Id. Thus, where the alleged injury to the individual results only from the injury to the corporation, the injury is merely derivative and the individual does not have a right of action against the third party.

In the present case, defendants alleged in their counterclaim that plaintiff breached contractual as well as other duties owed to defendants' company, Precision Wiring, Inc., which caused injury to defendants. Defendants' alleged injuries resulted from the injury to the company. Thus, defendants lack standing to sue plaintiff. The trial court did not err by granting summary disposition in favor of plaintiff on defendants' counterclaim.

Defendants next argue that the trial court erred by entertaining plaintiff's renewed motion for summary disposition at the beginning of trial without giving prior notice to defendants.

The trial court denied plaintiff's original motion for summary disposition on October 20, 1987. Plaintiff did not file a motion for reconsideration. On the first day of trial, plaintiff renewed its motion for summary disposition based upon an unpublished federal district court opinion, Park-Ohio Industries, Inc v. Tucker Induction Systems Ltd, decided October 21, 1987 (ED Mich., Docket No. 82-2828). No prior notice was provided to defendants. The trial court declared the motion to be a motion for reconsideration.

MCR 2.119(C)(1) provides:

(1) Unless a different period is set by these rules or by the court for good cause, a written motion (other than one that may be heard ex parte), notice of the hearing on the motion, and any supporting brief or affidavits must be served as follows:

(a) at least 9 days before the time set for the hearing, if served by mail, or

(b) at least 7 days before the time set for the hearing, if served by delivery under MCR 2.107(C)(1) or (2).

MCR 2.119(F)(1) provides:

(1) Any motion for rehearing or reconsideration of the decision on a motion must be served and filed not later than 7 days after entry of the order disposing of the motion.

The grant or denial of a motion for rehearing is a matter addressed to the sound discretion of the trial court. Brown v. Libbey-Owens-Ford Co., 166 Mich.App. 213, 216, 420 N.W.2d 106 (1987), lv. den. 430 Mich. 860 (1988).

We believe that the trial court did not abuse its discretion in hearing plaintiff's motion without prior notice to defendants. Defendants were not prejudiced by the trial court's decision. Had defendants discovered case law to refute plaintiff's arguments after the trial court granted the motion, nothing in the court rules prohibited defendants from moving for rehearing or for relief from the order for summary disposition under MCR 2.612. Furthermore, the fact that defen...