Presnell v. Board of County Road Com'rs of Wayne County

• Citation: 306 N.W.2d 516,105 Mich.App. 362
• Decision Date: 10 April 1981
• Docket Number: Docket No. 48149
• Parties: Thomas PRESNELL, Personal Representative of the Estate of Hettie Presnell, Deceased, Plaintiff-Appellee, v. BOARD OF COUNTY ROAD COMMISSIONERS OF the COUNTY OF WAYNE, Michigan,Defendant-Third Party Plaintiff-Appellant, v. Gerald G. KING and Mary King, his wife, Third Party Defendants.
• Court: Court of Appeal of Michigan — District of US

Page 516

306 N.W.2d 516

105 Mich.App. 362

Thomas PRESNELL, Personal Representative of the Estate of Hettie Presnell, Deceased, Plaintiff-Appellee, v. BOARD OF COUNTY ROAD COMMISSIONERS OF the COUNTY OF WAYNE, Michigan,Defendant-Third Party Plaintiff-Appellant, v. Gerald G. KING and Mary King, his wife, Third Party Defendants.

Docket No. 48149.

Court of Appeals of Michigan.

April 10, 1981.

Released for Publication June 16, 1981.

Robert E. Murphy, Detroit, for defendant-third party plaintiff-appellant.

Donald D. Unwin, Wayne, for plaintiff-appellee.

Before RILEY, P. J., and HOLBROOK and BREIGHNER, ^* JJ.

PER CURIAM.

This lawsuit arose out of a dispute between plaintiff's decedent and the defendant Board. Hettie Presnell claimed that after the defendant Board had widened the street in front of property she formerly owned in Garden City, defendant agreed to pay her $9,500 for damages resulting from the change in grade to her property. For reasons immaterial to this appeal, the money was never paid. Hettie Presnell then filed suit against the Board for breach of contract and inverse condemnation. Since Hettie Presnell died prior to the trial date, her son, Thomas Presnell, personal representative of Hettie Presnell's estate, became plaintiff in the action.

On the date set for trial, and following a settlement conference, the parties entered into a settlement agreement on the record in open court. The terms of the agreement were that defendant would pay plaintiff $5,000 for damages plus $1,200 interest, for a total of $6,200.

The terms of the settlement agreement were brought before the Wayne County Board of County Road Commissioners at its next meeting, two days later, by defendant's managing director. The Board determined that, since Hettie Presnell had sold her property to new owners to whom the Board might also be liable, it could not legally expend public funds to settle with plaintiff. It therefore refused to ratify the settlement placed on the record in open court.

On October 15, 1979, a hearing was held on plaintiff's motion for entry of judgment. The defendant Board argued that, since its attorney was without authority to enter into the settlement agreement and since the defendant Board had refused to ratify the agreement, the agreement was not binding. The trial court stated that it specifically remembered defendant's counsel telling it that he had the authority to settle for the amount of the settlement. Defense counsel responded that he had received such authorization from the Board's managing director, Mr. O'Rourke, but added that Mr. O'Rourke's authorization was invalid because as a matter of law, defense counsel needed the entire Board's authorization. The trial court concluded that the settlement agreement was binding and entered the consent judgment, from which defendant appeals as of right.

As a general rule, the "(c)ompromise of pending controversies are (sic ) favored by the courts and will only be voided on satisfactory evidence of mistake, fraud or unconscionable advantage." Pedder v. Kalish, 26 Mich.App. 655, 658, 182 N.W.2d 739 (1970). As another general rule, it has been said that "attorney who has the conduct of a lawsuit is presumed to have authority to act on his client's behalf". Jackson v. Wayne Circuit Judge, 341 Mich. 55, 59, 67 N.W.2d 471 (1954). This general rule, however, has not been extended to permit an attorney to compromise a client's claim absent specific authority from the client to do so. In Henderson v. Great Atlantic & Pacific Tea Co., 374 Mich. 142, 147, 132 N.W.2d 75 (1965), the Michigan Supreme Court stated the rule as follows:

"The principle which governs this case is set forth in 66 A.L.R. 107 et seq., as supplemented in 30 A.L.R.2d 944 et seq., as follows:

" 'The almost unanimous rule, laid down by the courts of the United States, both Federal and State, is that an attorney at law has no power, by virtue of his general retainer, to compromise his client's cause of action; but that precedent special authority or subsequent ratification is necessary to make such a compromise valid and binding on the client.' (Citing numerous cases)

"The above rule has been adhered to in Michigan in Eaton v. Knowles, 61 Mich. 625 (28 N.W. 740 (1886)); Fetz v. Leyendecker, 157 Mich. 355 (122 N.W. 100 (1909)); People State Bank v. Bloch, 249 Mich. 99 (227 N.W. 778 (1929)); and most recently in Wells v. United Savings Bank of Tecumseh, 286 Mich. 619 (282 N.W. 844 (1938))." (Footnote deleted.)

The question on appeal is whether the general rule for setting aside compromises and settlements, as enunciated in Pedder v. Kalish, supra, should apply to the facts of this case. The Wayne County Board of County Road Commissioners is a "body corporate", and it derives its powers from the Legislature. M.C.L. § 224.9; M.S.A. § 9.109 provides that:

"(1) The board of county road commissioners shall constitute and be a body corporate with the right of making and using a common seal and altering the same. A majority of the members of the board shall constitute a quorum for the transaction of business. * * *

"(2) The board shall annually appoint 1 member as chairperson to serve during the pleasure of the board. The board of county road commissioners shall act as an administrative board only and the function of the board shall be limited to the formulation of policy and the performance of official duties imposed by law * * *.

"(3) * * * The board shall be known as the board of county road commissioners * * * and * * * may sue and be sued * * *."

Regardless of whether it is called a "body politic" or a "body corporate", the Board of County Road Commissioners is a municipal corporation, and many of the rules and attributes associated with corporations also apply to municipal corporations.

"A municipal corporation is a body politic created by organizing the inhabitants of a prescribed area, under the authority of the legislature, into a corporation with all the usual attributes of a corporate entity, but endowed with a public character by virtue of having been invested by the legislative with subordinate legislative powers to administer local and internal affairs of the community * * *." 56 Am.Jur.2d, Municipal Corporations, Counties and Other Political Subdivisions, § 4, p. 73.

Because M.C.L. § 224.9, confers on the board the power to sue or be sued, the board also has the implied power to compromise or settle claims arising out of a subject matter concerning which it...