Ralph Shrader, Inc. v. Ecclestone Chemical Co., Docket No. 6521

• Decision Date: 26 February 1970
• Docket Number: No. 1,Docket No. 6521,1
• Citation: 22 Mich.App. 213,177 N.W.2d 241
• Parties: RALPH SHRADER, INC., a California corporation, Plaintiff-Appellant, v. The ECCLESTONE CHEMICAL COMPANY, Inc., a Michigan corporation, Defendant-Appellee, v. The MIDLAND TAR DISTILLERS, LTD., and The Midland Tar Distillers, Inc., a foreign corporation, Third Party Defendants and Appellees
• Court: Court of Appeal of Michigan — District of US

Page 241

177 N.W.2d 241

22 Mich.App. 213

RALPH SHRADER, INC., a California corporation, Plaintiff-Appellant, v. The ECCLESTONE CHEMICAL COMPANY, Inc., a Michigan

corporation, Defendant-Appellee, v. The MIDLAND TAR DISTILLERS, LTD., and The Midland Tar

Distillers, Inc., a foreign corporation, Third

Party Defendants and Appellees.

Docket No. 6521.

Court of Appeals of Michigan, Division No. 1.

Feb. 26, 1970.

Released for Publication June 4, 1970.

Robert B. Knight, Hinks, Knight & Putnam, Detroit, for appellant.

Ivin E. Kerr, Detroit, for Ecclestone.

Vandeveer, Doelle, Garzia, Tonkin & Kerr, William J. McBrearty, Detroit, for Midland Tar.

Harvey, Kuse & Westen, Detroit, for Midland Tar.

Before R. B. BURNS, P.J., and HOLBROOK and V. J. BRENNAN, JJ.

R. B. BURNS, Presiding Judge.

On March 1, 1965 plaintiff filed suit in the United States District Court for the eastern district of Michigan, alleging that it was a California corporation that had purchased from Ecclestone Chemical Company, a Michigan corporation, a quantity of cresylic acid on September 27, 1963, to be used in producing immersion cleaner, but that the acid did not conform to previous samples, was defective and caused plaintiff to suffer substantial damages.

On April 19, 1967 the suit was dismissed without prejudice when during trial it became apparent that plaintiff was also established in Michigan and the court lacked the necessary diversity jurisdiction.

On May 8, 1967 plaintiff filed its present suit but a motion for summary judgment was granted by the trial court on the ground that the action was barred by the three year statute of limitations. M.C.L.A. § 600.5805 (Stat.Ann.1962 Rev. § 27A.5805).

Plaintiff appeals, claiming its cause of action was not in tort but in contract so that the three year statute did not apply, or if the three year statute of limitations did apply it was tolled when plaintiff originally filed suit in Federal Court. Because of our decision in regard to the latter claim it will not be necessary to undertake an analysis of the nature of plaintiff's cause of action against the defendant.

M.C.L.A. § 600.5856 (Stat.Ann.1962 Rev. § 27A.5856) provides:

'The statutes of limitations are tolled when

'(1) the complaint is filed and a copy of the summons and complaint are served on the defendant, or when

'(2) jurisdiction over the defendant is otherwise acquired, or when,

'(3) the complaint is filed and a copy of the summons and complaint in good faith, are placed in the hands of an officer for immediate service, but in this case the statute shall not be tolled longer than 90 days thereafter.'

The committee comment explaining the statute says:

'In the event of the dismissal, on some ground other than on the merits (as for example--lack of jurisdiction over the subject matter) of an action in which jurisdiction over the defendant is acquired, the period of time from the time of service or the acquisition of jurisdiction over the defendant until dismissal will not count as part of the time of limitation, for during such time the statute has been tolled.'

The Federal Court suit was not dismissed on the merits; it was dismissed for lack of jurisdiction over the subject matter.

Defendant relies on Lillibridge v. Riley (C.A. 5, 1963), 316 F.2d 232, wherein the United States Court of Appeals, Fifth Circuit, held that in order for the Georgia renewal statute ¹ to prevent the operation of the statute of limitations, the first suit must have been one in which the court had jurisdiction of the parties and of the subject matter. This decision was consistent with the applicable law as applied by the Georgia courts.

We prefer the reasoning of Judge Cardozo in Gaines v. City of New York (1915), 215 N.Y. 533, 537, 539, 540, 109 N.E. 594, 595, 596. The plaintiff sued the city of New York in the city court which did not have jurisdiction over actions against the city. Judge Cardozo wrote:

'Both the Appellate Term and the Appellate Division have held that the limitation prescribed by that section ² does not apply where the first action has been dismissed for the failure of jurisdiction. They have held that such an action is a nullity for all purposes. We do not share that view. * * * That the plaintiff's case is within the letter of the...