Wayne Creamery v. Suyak

• Decision Date: 22 March 1968
• Docket Number: No. 1,Docket No. 2186,1
• Citation: 10 Mich.App. 41,158 N.W.2d 825
• Parties: WAYNE CREAMERY, a Michigan Co-Partnership consisting of Henry J. Johnson and Robert H. Johnson, Plaintiff-Appellant, v. Andrew SUYAK, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 825

158 N.W.2d 825

10 Mich.App. 41

WAYNE CREAMERY, a Michigan Co-Partnership consisting of

Henry J. Johnson and Robert H. Johnson, Plaintiff-Appellant, v. Andrew SUYAK, Defendant-Appellee.

Docket No. 2186.

Court of Appeals of Michigan, Division No. 1.

March 22, 1968.

Released for Publication June 3, 1968.

Leo Papp, Detroit, for appellant.

Gregory M. Pillon, Detroit, for appellee.

Before LEVIN, P.J. and BURNS and McGREGOR, JJ.

LEVIN, Presiding Judge.

The trial judge, by an other Nunc pro tunc, reformed and amended a default judgment entered in favor of plaintiff-appellant Wayne Creamery against defendant-appellee Andrew Suyak to eliminate language in the original default judgment which found Suyak indebted to the Creamery for 'conversion' of money and 'willful and reckless' misuse of a Creamery-owned truck used by Suyak in working one of Creamery's milk routes. Suyak was adjudicated a bankrupt between the date on which the default judgment was entered and the date on which the amending Nunc pro tunc order was entered. The form of the default judgment would be relevant to the question whether the indebtedness evidenced by that default judgment could be discharged in bankruptcy. ¹ (See 11 U.S.C. § 25 and footnote 8).

The complaint alleged that Suyak leased a milk route from Creamery and, in connection with that lease, purchased from Creamery accounts receivable and a milk truck; that Suyak executed both a chattel mortgage of the truck and a continusing assignment of accounts receivable to secure payment of all then and future indebtednes of Suyak to Creamery; and that he operated the milk route for a little over a year, at which time he breached the lease for which Creamery claimed damages of $6,627.30.

Following entrance of Suyak's default for failure to answer and after a change in the attorneys representing Creamery, Creamery moved for default judgment. At the hearing on that motion, Creamery's witness testified to the execution and delivery of the lease, the chattel mortgage and the assignment of accounts receivable; ² he further testified that Suyak collected, but did not turn over to the Creamery, $5,229.59 belonging to Creamery, and that repairs to the truck were required because Suyak failed to maintain the vehicle properly. There were several other dibit and credit items, including an item of approximately $740 for damages resulting from the alleged wrongful termination of the lease. For all these damages, a default judgment in the amount of $5,969.59 was entered on November 19, 1965. The judgment recited that $5,229.59 of Suyak's indebtedness was for conversion of Creamery monies to his own use, and $328.81 was for willful and reckless misuse of the truck.

Following entry of the default judgment, Creamery pursued various remedies in an effort to collect it. Claiming he was never served with summons or otherwise made aware of the pendency of these proceedings, Suyak, on February 14, 1966, moved to set aside the default judgment, which motion was denied on March 1, 1966. On March 8, 1966, a motion for 'reformation and amendment' of the default judgment was filed by Suyak, claiming relief pursuant to RJA § 2311 ³ and GCR 1963, 528.3. He was adjudicated a bankrupt on March 30, 1966. The amending order Nunc pro tunc, from which Creamery now appeals, was entered on April 1, 1966.

I.

Suyak's motion for reformation and amendment of the default judgment asserted that the just cited statutory provision and court rule applied because the complaint did not allege conversion and did not sound in tort. Thus, Suyak alleged, (1) the complaint failed to make him aware that Creamery was seeking a judgment not dischargeable in bankruptcy, (2) the findings in the original default judgment of conversion and willful and reckless misuse of the truck did not conform to the allegations in the complaint, (3) through mistake or inadvertence, fraud, ⁴ misrepresentation, or other misconduct on the part of Creamery the court was led to enter a default judgment in the form in which it was entered, and (4) equity and good conscience required reformation and amendment of the default judgment to conform with Creamery's pleadings.

Creamery answered, contending that the proofs taken during the hearing on Creamery's motion for default judgment substantiated the findings of the court in the default judgment as originally entered. ⁵ Creamery further contended that, if the court should find that there was a variance between those proofs and Creamery's pleadings, the court should enter an order pursuant to RJA 2311, amending the complaint to conform with the proofs.

Counsel for both parties, but no witnesses, were heard at the hearing on Suyak's motion to reform and amend the default judgment held on March 25, 1966. After hearing argument, the court stated the default judgment containing findings that Suyak converted to his own use monies belonging to Creamery should not have been entered upon a complaint alleging only breach of the terms of the lease. Creamery then renewed its request that the court permit an amendment of the complaint pursuant to RJA 2311. Suyak's counsel stated he had no objection to the court granting Creamery leave to amend its complaint, so long as Suyak was permitted to answer such an amended complaint. Creamery's counsel responded he was willing to stipulate that there should be a trial if Suyak would put up a bond, to which Suyak's counsel responded that, if a bond could be obtained, Suyak would file it and the parties could have 'a trial on the issues.' The court expressed doubt whether Suyak could obtain a bond.

The court then announced it would amend the judgment to conform to the pleadings, eliminating the reference to conversion. ⁶ The court refused to allow Creamery to amend its complaint.

II.

Suyak desired that the indebtedness reflected in the judgment be dischargeable in bankruptcy, and Creamery disired to avoid the effect of such a discharge. Suyak desired to reform and amend the judgment to conform to the pleadings, while Creamery desired to reform and amend the pleadings to conform to its concept of the proofs. On this record we can see no reason, and none has been suggested by either counsel, why either party's prayer for reformation and amendment was any more deserving than the other's.

However, we are satisfied the complaint failed to state facts apprising Suyak of the nature of the claim which the default judgment found had been established, and that the discrepancy between the complaint's allegations and the default judgment's findings is to sufficient importance on the practical issue between the parties--the dischargeability of the indebtedness--that the trial judge correctly ruled the default judgment should not have been permitted to stand as originally entered.

The purpose of a complaint is to apprise the defendant of the issues he will be required to meet and the relief sought. GCR 1963, 111.1 ⁷ requires the pleader to state the facts with such specific averments as are necessary reasonably to inform the adverse party of the cause he is called upon to defend. To a defendant in such precarious financial straits that voluntary bankruptcy appears to be a desirable alternative, it is vitally important whether a judgment sought against him is dischargeable in bankruptcy. ⁸ Where a plaintiff desires a trial judge to make findings in a default judgment affecting the dischargeability of the judgment in bankruptcy, the complaint, as served upon the defendant, must have stated facts supporting the judgment to the extent required by rule 111.1. Compare Harris v. Deitrich (1874), 29 Mich. 366; McMahon v. Rooney (1892), 93 Mich. 390, 393, 53 N.W. 539; Colling v. McGregor (1906), 144 Mich. 651, 653, 108 N.W. 87; Foster v. Talbot (1932), 257 Mich. 489, 492, 241 N.W. 141; Smak v. Gwozdik (1940), 293 Mich. 185, 192, 291 N.W. 270. See, also, 7 Callaghan's Michigan Pleading and Practice § 44.31. ⁹

III.

While we agree with the trial judge that the difference between the pleading in the complaint and the findings in the default judgment obliged him to set aside the default judgment, we disagree with the form of his order and with his refusal to allow Creamery to amend its complaint.

RJA 2311 first appeared in its present text ¹⁰ as C.L. 1857, § 4417, and appears to be derived from the revised statutes of 1838. The 1838 provision reads:

'Sec. 21. After the judgment rendered in any civil action, and (any) defects or imperfections in matter of Form, found in the record or proceedings in the action may be rectified and amended by the court in which the judgment is rendered, or by the court to which it shall be removed by writ of error, if substantial justice requires it, and If the amendment is in affirmance of the judgment.' (Emphasis supplied.) R.S.1838, part 3, title 2, ch. 8, § 21.

The foregoing language in the 1838 statute was preceded by the following:

'Sec. 20. The court in which any civil action is pending, may at any time Before judgment rendered therein, allow amendments, either in Form or substance, of any process, pleading or proceeding in such action, on such terms as shall be just and reasonable.' (Emphasis supplied.) R.S. 1838, part 3, title 2, ch. 8, § 20.

We note that under the 1838 statute, while the power of amendment before judgment related either to 'form or substance,' the court could correct only a 'matter of form' after judgment. The theme of RJA 2311 is precisely the same as § 71 of the 1838 statute. Therefore, we conclude from both the history of RJA 2311 and the ordinary meaning of its language that the power of amendment embodied in RJA 2311 permits amendment After judgment only as to 'matters of form,' not those of substance, and then only if the amendment is 'in Affirmance of the judgment'--the power of 'reformation and amendment' ¹¹ under RJA 2311 is not plenary, is qualified by the foregoing recited limitations, and may be utilized only to correct a ...