Shurlow Tile & Carpet, Inc. v. Dahlmann Bldg. Co., Docket No. 17682
| Decision Date | 26 June 1974 |
| Docket Number | Docket No. 17682,No. 3,3 |
| Citation | 220 N.W.2d 732,54 Mich.App. 180 |
| Parties | SHURLOW TILE & CARPET, INC., a Michigan corporation, Plaintiff-Appellee, v. DAHLMANN BUILDING COMPANY, a Michigan corporation, Defendant-Appellant |
| Court | Court of Appeal of Michigan — District of US |
Robert W. Ionta, Brown, Colman & DeMent, Kalamazoo, for defendant-appellant.
Arthur C. Spalding, Rhoades, McKee & Boer, Grand Rapids, for plaintiff-appellee.
Before ALLEN, P.J., and T. M. BURNS and SMITH,* JJ.
The defendant appeals by leave granted from the trial court's denial of its motions for accelerated judgment and summary judgment, which motions sought dismissal of plaintiff's suit on the ground that the plaintiff's corporate charter had become void under M.C.L.A. § 450.91; M.S.A. § 21.91, at the time that the plaintiff contracted with the defendant, thus rendering the contract unenforceable. The facts are not in dispute and a concise statement of facts has been stipulated. We affirm the trial court.
The plaintiff was incorporated in 1966, but failed to pay its annual fees or file its annual reports for the years, 1968 and 1969, as a consequence of which its corporate charter became void under § 91 on May 15, 1970. On January 22, 1971 the plaintiff contracted with the defendant to furnish materials and labor for installation of counter tops and tile work in an apartment project. This contract was made and partially performed after the plaintiff's charter had become void under § 91. Disagreements arose between the parties as a result of which plaintiff failed to complete the contract. The plaintiff seeks damages from an alleged breach of contract by the defendant. A complaint was filed on January 17, 1972. Because of the status of the plaintiff's charter this action was dismissed without prejudice.
The plaintiff then complied with M.C.L.A. § 450.431; M.S.A. § 21.248(1) as a result of which its corporate charter was reinstated on December 29, 1972, whereupon plaintiff, on January 18, 1973, commenced the present action seeking damages for the alleged breach of contract. The defendant filed motions for summary judgment and accelerated judgment and the trial court denied both motions, commenting in part:
'It is the conclusion and decision of this court that to give meaning, to give life, to give vitality to (MCLA 450.432; MSA 21.248(2)), it must be held that upon compliance and upon return of its charter the plaintiff corporation is in a position to bring an action based upon a contract entered into during the time that its charter was suspended or invalid by reason of the non-payment of fees or filing of necessary reports.'
The first question presented is whether a profit corporation that contracts at a time when its corporate charter is void under § 91 can sue on that contract after the corporation has complied with the Michigan Corporation Act and has had its corporate charter reinstated. There are several statutory sections that are relevant to this question.
M.C.L.A. § 450.87; M.S.A. § 21.87, provides that any corporation that neglects to file its annual report and/or pay any fees required shall have its corporate powers suspended during the period of default and shall not maintain any action in any court of this state upon any contract entered into during the time of such default.
M.C.L.A. § 450.91; M.S.A. § 21.91, provides that any profit corporation that is in default for two consecutive years in filing its annual reports or payment of any required fees shall have its corporate charter declared void without any judicial proceeding.
M.C.L.A. § 450.431; M.S.A. § 21.248(1), provides that any profit corporation whose charter has become void under the provisions of § 91 may file such delinquent reports and pay such delinquent fees in which event the voidance of its charter shall be waived and it shall be revived in full force and effect.
M.C.L.A. § 450.432; M.S.A. § 21.248(2), provides that:
'Upon compliance with the provisions of this act, the rights of such corporation shall be the same as though no forfeiture had been operative and all contracts entered into during such intervals shall become valid.'
The defendant argues that it would be incongruous to allow a profit corporation to maintain an action upon a contract entered into while its corporate charter was void under § 91 when the express language of § 87 provides that contracts entered into while corporate powers are suspended may never be the subject of action in any court of this state. The defendant argues that the greater evil is rewarded while the lesser evil is punished. The defendant further argues that the punitive effect of § 87 continued on into the period covered by § 91 and cites Dawn Construction Co. v. Paris Home Builders, Inc., 360 Mich. 281, 103 N.W.2d 410 (1960), and Kupski v. Bal Investment Co., 35 Mich.App. 680, 192 N.W.2d 519 (1971). Both of these cases involve contracts entered into during the period of suspension under § 87 and neither opinion mentions M.C.L.A. § 450.432; M.S.A. § 21.248(2).
The language of the aforementioned statutes is plain and unequivocal. In construing § 87 the courts have been compelled to reach a harsh result because of the language and history of the statute. Irvine & Meier v. Wienner, 212 Mich. 199, 180 N.W. 492 (1920); Stoneleigh Homes, Inc. v. Jerome Building Co., 31 Mich.App. 542, 188 N.W.2d 152 (1971). In this case we...
To continue reading
Request your trial
-
City Communications, Inc. v. City of Detroit
...if it cures its default at any time prior to actual dismissal of a suit." Id. at 735. See also Shurlow Tile & Carpet v. Dahlmann Bldg. Co., 54 Mich.App. 180, 220 N.W.2d 732, 734 (1974) (holding a corporation dissolved by state law after it began performing a contract could enforce the contr......
-
Bergy Bros., Inc. v. Zeeland Feeder Pig, Inc.
...into during such intervals shall become valid." We agree with the holding of the trial court. See Shurlow Tile & Carpet, Inc. v. Dahlmann Building Co., 54 Mich.App. 180, 220 N.W.2d 732 (1974). II Is defendant George Spencer, individually, liable to plaintiff for the debt underlying the The ......