Oleksy v. Sisters of Mercy of Lansing, Mich., Docket No. 44455

Citation285 N.W.2d 455,92 Mich.App. 770
Decision Date02 October 1979
Docket NumberDocket No. 44455
PartiesStanley P. OLEKSY, M.D., Byrne M. Daly, M.D., Francis B. Berkemeier, Arnold J. Kiessling, M.D., Patricia Gorney, Virginia Udrys, Gerald J. Vogt, Mary E. Clark, as Donors to and Settlors of, a charitable trust known as Mercy Hospital and all other Donors and Settlors similarly contributing thereto, and the Committee to Preserve Mercy Hospital, Inc., a non-profit corporation, Plaintiffs-Appellants and Cross-Appellees, v. SISTERS OF MERCY OF LANSING, MICHIGAN, a Michigan Non-Profit Corporation, and W. A. Foote Memorial Hospital, Inc., a Michigan Non-Profit Corporation, Defendants-Appellees and Cross-Appellants. 92 Mich.App. 770, 285 N.W.2d 455, 1980-1 Trade Cases P 63,066
CourtCourt of Appeal of Michigan (US)

[92 MICHAPP 772] Phillip H. Berkemeier, Brooklyn, Alvin G. Dahlem, Jackson, for plaintiffs-appellants.

Louis J. Colombo, Jr., Lawrence F. Raniszeski, Birmingham, for Sisters of Mercy.

Jack C. Radcliffe, Jr., John H. Schomer, James B. Falahee, Jackson, for W. A. Foote Memorial.

Before J. H. GILLIS, P. J., and R. B. BURNS and KAUFMAN, JJ.

PER CURIAM.

The plaintiffs in this cause appeal from an order of the Jackson County Circuit Court denying their action in quo warranto seeking to set aside the sale of Mercy Hospital in Jackson, Michigan, by defendant Sisters of Mercy of Lansing, Michigan, to defendant W. A. Foote Memorial Hospital.

After a pre-trial conference, the trial court entered a pre-trial order limiting the issues to be presented at trial to: whether defendants have [92 MICHAPP 773] exceeded their corporate powers; and, whether defendants have violated the Anti-Trust laws. It is fundamental that this pre-trial order controls the subsequent course of the litigation. See GCR 1963, 301.3 and Bednarsh v. Winshall, 374 Mich. 667, 133 N.W.2d 202 (1965).

After an extensive trial upon these questions, the trial court set forth its conclusions in a well-written, well-reasoned opinion. We recognize the trial court's unique position, allowing it to survey the briefs and facts presented first-hand, and observe the witnesses appearing before it. Moreover, we find ourselves in complete accord with the trial court's conclusions. Therefore, as we do not feel that we can improve upon the trial court's opinion, we adopt it as our own and set it forth in full herein. Our adoption of this opinion necessarily renders moot the various procedural challenges to plaintiffs' maintenance of this action that defendants have raised in their cross-appeal, to-wit: questions of standing, estoppel, laches, and res judicata.

As the trial court stated:

"This is an action in the nature of quo warranto seeking to set aside the August 29, 1975, sale of Mercy Hospital in Jackson, Michigan, by defendants, Sisters of Mercy of Lansing, Michigan (hereinafter called 'Mercy'), to defendant, W. A. Foote Memorial Hospital, Inc. (hereinafter called 'Foote'). At that time Foote operated a private non-profit hospital in Jackson and the Sisters of Mercy operated Mercy Hospital also in Jackson. Prior to the sale of Mercy Hospital to Foote, plaintiffs had unsuccessfully attempted to purchase Mercy Hospital. The plaintiff, Committee to Preserve Mercy Hospital, is a non-profit corporation organized for the purpose of taking over ownership and operation of Mercy Hospital.

"In 1975, the Sisters of Mercy entered into an agreement to sell Mercy Hospital to Foote, such agreement [92 MICHAPP 774] being consummated on August 29, 1975. On July 31, 1975, while negotiations between the Sisters of Mercy and Foote were still pending, the individual plaintiffs filed a complaint against the Sisters of Mercy (Jackson County No. 75-004921-CZ) seeking a preliminary injunction restraining the Sisters of Mercy from conveying Mercy Hospital; an injunction restraining the Sisters of Mercy from using the proceeds from such sale in any community other than Jackson; and an order transferring Mercy Hospital to a then unspecified group. This complaint (hereinafter called 'Oleksy I') alleged that the proposed sale violated a charitable trust created by the contributions of plaintiff and others.

"In response to this complaint, the Sisters of Mercy filed a motion for summary judgment, which was heard by Judge Russell Noble on August 5, 1975, together with a motion to intervene filed by Bruce A. Barton, then prosecuting attorney for Jackson County. On August 11, 1975, Barton filed an amended motion to intervene which attached a proposed complaint of intervener. In addition to adopting all the allegations of the Oleksy I complaint, Barton's complaint set forth the basis for an action in the nature of Quo Warranto. He further alleged that the Sisters of Mercy lacked corporate authority to convey the hospital facilities to Foote.

"On August 15, 1975, Judge Noble dismissed Oleksy I and denied Barton's motion to intervene, holding that the Attorney General was the proper party to maintain the actions since the complaints sought to enforce the terms of a charitable trust under M.C.L.A. 554.351 et seq.

"Motions for rehearing were filed by the parties and denied and plaintiffs appealed to the Michigan Court of Appeals. Barton took no appeal. However, on August 19, 1975, Barton filed a complaint in the nature of Quo Warranto (Jackson County Circuit Court No. 75-005068-CZ) naming only the Sisters of Mercy as a defendant, this complaint containing essentially the same allegations as were set forth in Oleksy I.

"On September 2, 1975, the Sisters of Mercy filed a motion for summary judgment and thereafter Barton filed an amended complaint in the nature of quo warranto adding Foote as a defendant and further alleging that the sale constituted an abuse and misuse of corporate[92 MICHAPP 775] authority between Sisters of Mercy and Foote, and further asserting that the sale constituted a violation of the Michigan Anti-trust Statutes.

"Defendants' motion for summary judgment was granted as to all of plaintiffs' allegations and Barton thereupon appealed to the Michigan Court of Appeals. The two appeals then pending before the Court of Appeals were consolidated for purpose of hearing and disposition, and on March 9, 1977, the Court of Appeals issued an opinion affirming the judgments of dismissal (Oleksy, et al. v. Sisters of Mercy of Lansing, Michigan, et al., 74 Mich.App. 374 (253 N.W.2d 772)). No appeal was taken by either of the plaintiffs or Barton to the Supreme Court.

"Approximately 10 months later plaintiffs requested and this court granted leave to file a complaint in the nature of quo warranto. The defendants filed motions to set aside the order granting leave to file said action of quo warranto and alternatively for accelerated judgment and summary judgment of dismissal, such motions being denied by this court on April 26, 1978. Defendants then filed an application for leave to appeal and designation of appeal as emergency appeal and a motion for immediate consideration thereof with the Court of Appeals. On June 7, 1978, the Court of Appeals (Docket No. 78-1515) denied defendants' application for leave to appeal for failure to persuade the Court for the need for immediate appellate review. The defendants then filed an application for leave to take an emergency appeal to the Michigan Supreme Court, which application was denied (403 Mich. 827 (1978)).

"On October 12, 1978, pursuant to a stipulation of the parties, this court entered an order dismissing all allegations of the complaint respecting the existence and representation of a class of persons in the prosecution of this action.

"Other than the two central issues of ultra vires conduct and violation of the anti-trust laws, which will be addressed last, the pleadings and proofs raised several lesser issues which can be disposed of with little discussion:

[92 MICHAPP 776]

"I

" SHOULD PLAINTIFF, STANLEY P. OLEKSY, BE DISMISSED AS A PARTY, BEING NO LONGER A RESIDENT OF MICHIGAN?

"The answer is no. Defendants have been unable to direct our attention to any authority in support of their claim that one who commences an action in Michigan while then a resident of Michigan, loses his standing by subsequently removing his residence from the state. It is this writer's opinion that the two main issues in this case (ultra vires conduct and anti-trust violations) are not issues which turn on residency.

"II

" IS PLAINTIFFS' CLAIM THAT THE SISTERS OF MERCY HELD AS TRUSTEES OF A CHARITABLE TRUST RES JUDICATA?

"The answer is no. As pointed out by defendants, their motions for summary judgment, pursuant to GCR 1963, 117.2(1), must accept as true plaintiffs' allegations that Mercy Hospital was held as a charitable trust, and do not constitute an admission by them that such a charitable trust existed. In like manner, the opinion in Oleksy v. Sisters of Mercy, 74 Mich.App. 374 (253 N.W.2d 772) (1977), in ruling on defendants' motion for summary judgment, of necessity, had to accept as true plaintiffs' allegation that the hospital held in charitable trust. It did not decide as a substantive matter, that such was the case.

"III

"THE RELIGIOUS ISSUE

"Defendants have renewed their challenge to the court's jurisdiction over this dispute on grounds that it is a religious dispute under the First and Fourteenth Amendments to the United States Constitution. In determining that this court does have jurisdiction, I find nothing in the trial record which would cause a change in this court's opinion dated April 18, 1978.

"IV

"DID DEFENDANTS, SISTERS OF MERCY, ABUSE THEIR CORPORATE AUTHORITY OR ENGAGE IN ULTRA VIRES CONDUCT IN SELLING MERCY HOSPITAL TO FOOTE?

"The answer is no. Plaintiffs presented ten witnesses (counsel stipulated that an additional twenty witnesses [92 MICHAPP 777] would have if sworn and questioned, testified to the same effect) who testified that they made contributions to Mercy Hospital during the...

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    ...of an instrument with respect to a charitable trust. M.C.L. § 14.254(a),(b); see also Oleksy v. Sisters of Mercy of Lansing, Michigan, 92 Mich.App. 770, 777, 285 N.W.2d 455, 459 (1979) (holding that if a charitable trust were created with respect to hospital, the court could not consider th......
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