Mishke v. Eddy Realty Co.

• Decision Date: 14 February 1928
• Docket Number: No. 13 April Term.,13 April Term.
• Parties: MISHKE v. EDDY REALTY CO.
• Court: Michigan Supreme Court

241 Mich. 501

217 N.W. 900

MISHKE

v.EDDY REALTY CO.

No. 13 April Term.

Supreme Court of Michigan.

Oct. 4, 1926.

On Rehearing Feb. 14, 1928.

Appeal from Circuit Court of Wayne County, in Chancery; Russell R. McPeek, Judge.

Suit by Michael Mishke against the Eddy Realty Company, to cancel an option agreement and to quiet title to land. Decree for defendant, and plaintiff appeals. Reversed and rendered.

Argued before the Entire Bench. Benjamin, Betzoldt & Bassett, of Detroit, for appellant.

Campbell, Bulkley & Ledyard, of Detroit (Selden S. Dickinson, of Detroit, of counsel), for appellee.

Andrew B. Dougherty, Atty. Gen., Clare Retan, Deputy Atty. Gen., and Donald W. Sessions, Asst. Atty. Gen., amici curiae.

Benjamin, Betzoldt & Bassett, of Detroit, for appellant.

Campbell, Bulkley & Ledyard, of Detroit (Seldon S. Dickinson, of Detroit, of counsel), for appellee.

Harry A. Metcalf, Asst. Atty. Gen., Stevenson, Butzel, Eaman & Long, of Detroit, Mark Norris, G. A. Wolf, and Clare J. Hall, all of Grand Rapids, Andrew B. Dougherty, Atty. Gen., Clare Retan, Deputy Atty. Gen., and Donald W. Sessions, Asst. Atty. Gen., amici curiae.

BIRD, C. J.

On October 4, 1924, plaintiff gave defendant an option agreement to purchase 37 acres of land which he owned in the township of Redford, Wayne county, for $1,600 an acre. Within a few days thereafter plaintiff rescinded the option agreement and tendered back the amount that had been paid thereon, claiming that he was defrauded in the making of the agreement. He then filed this bill to cancel the option agreement and quiet his title.

Defendant answered, denying the fraud, and praying for affirmative relief.

At the hearing plaintiff contended: (1) That the option agreement was of no legal force because the defendant corporation was in default in filing its 1924 annual corporation report, and did not file it until after the option agreement was made. (2) Because the defendant failed to exercise its right under said option within the time specified in the agreement. (3) Because said option agreement was obtained by overreaching and therefore void.

The trial court denied the relief prayed for and dismissed plaintiff's bill. He appeals and makes the same contentions in this court.

(1) Defendant company was organized in June, 1924, and filed its articles with the secretary of state on June 14th. It made no report in July or August, 1924, in compliance with Act 84 of the Laws of 1921. Part 5, c. 2, § 5, of that act provides that:

‘Sec. 5. Every corporation organized for pecuniary profit, including every foreign corporation admitted to carry on business in this state, shall annually, in the month of July or August. make duplicate reports showing the condition of such corporation on the thirtieth day of June, next preceding, on suitable blanks to be furnished by the secretary of state, as hereinafter provided. Such report shall furnish the secretary of state with all information and facts necessary for the computation of the annual franchise fee provided for by law. The secretary of state is hereby authorized to require of any corporation any additional information that may be needed after the filing of its annual report for the purpose of computing such fee. Such report shall state the amount each of common and preferred capital stock authorized, and the amount thereof, subscribed for, and the amount thereof actually paid in cash, and the amount thereof paid in property; the total value as near as may be estimated of all property owned by the corporation; the value of different items or classes of property as follows: Real estate used in its business; real estate not used in its business; goods, chattels, merchandise, material and other tangible property; patent rights, trademarks and formulas; good will; and all other property including surplus, reserve funds and sinking funds, specifying the kind; value of all credits owing to the corporation; the amount of debts of the corporation; the name and post office address of each officer and director of the corporation, and such other information as the secretary of state may require.’

For a failure to comply with this section the act provides the following penalty:

‘If any corporation neglects or refuses to make and file the reports required by this chapter within the time herein specified, and shall continue in default for ten days thereafter, its corporate powers shall be suspended thereafter, until it shall file such report, and it shall not maintain an action in any court of this state upon any contract entered into during the time of such default.’

The defendant answered this contention by saying that Act 85 of the Laws of 1921 provided for a similar report to be made and filed in the month of July and August, and therefore it was improbable that the state intended both reports should be made and filed, and, inasmuch as the Legislature amended Act 85 (Act 233, 1923), it impliedly repealed the requirement for a report in Act 84. The provision for an annual report in Act 85 follows:

‘Sec. 7. Every corporation, for profit, whether domestic or foreign, authorized or admitted to do business within this state, excepting only railroad companies and interurban railroad companies, and telephone and telegraph companies, and foreign insurance companies, shall, in the month of July or August of the year nineteen hundred twenty-one and annually thereafter in the same months, file a report with the secretary of state showing its condition at the close of business upon the thirtieth day of June next preceding the filing of such report, which report shall be upon a form to be prescribed by the secretary of state, and shall contain, among other statements, the name of the corporation, place of doing business either within or without the state, the names and addresses of its officers and directors, the amount of authorized capital stock, and the number of shares of each class authorized, the capital stock subscribed, and paid for, and the par value of each kind of shares authorized; the market value of and the price fixed by the corporation for the sale of its shares of no par value, if any; the nature and kind of business in which such corporation is engaged, and the nature, location and value of the property owned and used by the corporation both in and without Michigan, given separately; and a complete and detailed statement of the...