Weathervane Window, Inc. v. White Lake Const. Co.
| Decision Date | 27 December 1991 |
| Docket Number | No. 121348,121348 |
| Citation | 192 Mich.App. 316,480 N.W.2d 337 |
| Parties | WEATHERVANE WINDOW, INC., Plaintiff-Appellant, v. WHITE LAKE CONSTRUCTION COMPANY, Defendant, and Shelby State Bank, Garnishee Defendant, and K & G Electric and Standale Lumber & Supply, Appellees, and David W. Marra, Receiver-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Donald R. Visser, Grandville, for Weathervane Window, Inc.
David R. Marra, Muskegon, for receiver David R. Marra.
John R. Grant, Grand Rapids, for Standale Lumber & Supply Co.
Before SHEPHERD, P.J., and SAWYER and REILLY, JJ.
Plaintiff, Weathervane Window, Inc., appeals from two orders entered in an action in the Muskegon Circuit Court in which a receiver was appointed: (1) an order determining claimants, determining amounts of claims allowed, and approving a plan of distribution; and (2) an order denying Weathervane's motion for distribution of funds and motion to rescind the ex parte order for appointment of a receiver. We affirm.
Weathervane, Standale Lumber and Supply, and K & G Electric were among approximately two dozen subcontractors and materialmen that worked on two jobs in 1985 under a general contractor, White Lake Construction Company, for its client American Adventures, Inc. American Adventures did not pay White Lake, who in turn did not pay its subcontractors. White Lake filed a claim in the Chapter 11 bankruptcy proceedings pending in the State of Washington against American Adventures, seeking $242,252.64 as a secured creditor by virtue of a previously filed construction lien. While that case was pending, on August 22, 1986, Weathervane filed an action in the Muskegon Circuit Court against White Lake for $13,353.10 alleged to be owed under its subcontract.
On August 21, 1986, the day before the filing of Weathervane's action, Weathervane and White Lake stipulated a consent judgment to be entered on October 1, 1987, in favor of Weathervane if full payment of Weathervane's claim was not made before that date. Under both the stipulation and the proposed consent judgment, White Lake agreed that it would hold in trust for Weathervane any partial payments received from American Adventures until the consent judgment was satisfied. On the same day, White Lake also executed an assignment to Weathervane of its construction lien rights against American Adventures to the extent of Weathervane's claim, as further security for the debt. Because payment was not made, the consent judgment was entered on October 1, 1987.
However, on July 9, 1987, before the entry of the consent judgment, White Lake filed a Chapter 11 petition in the United States Bankruptcy Court for the Western District of Michigan. On October 21, 1987, White Lake's attorney notified the Muskegon Circuit Court that an automatic stay of all proceedings had been issued upon the filing of the bankruptcy petition, and that the consent judgment should not be entered. The circuit court took no further action with respect to the consent judgment.
In September of 1988, as a result of its claims in American Adventures' bankruptcy proceeding, White Lake received, as a general unsecured creditor, a 16.2 percent interim distribution amounting to $39,244.93. After payment of attorney fees, the net amount of $36,476.56 was deposited in the Shelby State Bank. In spite of White Lake's bankruptcy petition and the automatic stay, Weathervane sought to enforce its consent judgment by making several attempts to garnishee the funds held by Shelby State Bank for White Lake. In January 1989, the bank disclosed that it had a debtor in possession account for White Lake in the amount of $36,476.56. Two other accounts were also held, with funds totaling $2,749.11.
On January 30, 1989, the bankruptcy court hearing White Lake's petition issued, on White Lake's motion, an order directing disposition of the monies White Lake had received from American Adventures. The court agreed with White Lake that the $36,476.54, certain stock certificates, and any future payments from the bankruptcy estate of American Adventures were impressed with a trust pursuant to the Michigan builders' trust fund act (MBTFA), M.C.L. Sec. 570.151 et seq.; M.S.A. Sec. 26.331 et seq., to the extent needed to pay the subcontractors and materialmen. Therefore, that money and stock were not part of White Lake's bankruptcy estate. In its written opinion, the court stated that all the creditors except Weathervane had agreed to a pro-rata distribution, that Standale reserved the right to seek full payment if Weathervane received more than its pro-rata share, and that Weathervane's claim that it should get full, as opposed to pro-rata, payment for its share was based purely on state law. The court abstained from resolving the dispute. In addition, the court authorized K & G to seek the appointment of a receiver for the trust funds in state court and ordered White Lake to tender to the receiver, free of the automatic stay, all funds and stock received by it from American Adventures.
On February 1, 1989, pursuant to the directive of the bankruptcy court, K & G petitioned the Muskegon Circuit Court for the appointment of a receiver to hold the funds until the claims of the various subcontractors and materialmen, including Weathervane, could be determined. On the same day, David W. Marra was appointed as receiver under an ex parte order. Weathervane, White Lake, and David Marra then stipulated that the garnishment action should be dismissed and that the funds held by the bank should be paid to Mr. Marra pending resolution of the claims. It was acknowledged that Weathervane would not waive any of its rights as a judgment creditor, garnishor, or assignee. The court entered an order pursuant to that stipulation on March 15, 1989.
Weathervane's subsequent motion to rescind the ex parte order for appointment of a receiver was denied. The receivership proceeding was then consolidated with the contract action previously filed by Weathervane. Next, Weathervane objected to the receiver's proposed pro-rata distribution and moved for distribution of the funds in accordance with its rights as a judgment creditor, garnishor, assignee. The trial court rejected Weathervane's challenge and ordered pro-rata distribution to all the claimants. The court reasoned that it would be inconsistent with the purpose of the MBTFA to allow one of several claimants to recover in full merely because that claimant acted first. The court was satisfied that White Lake had no claim to the funds it had received from American Adventures other than as trustee for the builders trust fund and that the stipulated agreement and assignment between Weathervane and White Lake was immaterial because White Lake could not assign funds that belonged to the trust fund to pay its corporate debts. On September 14, 1989, the court entered orders approving the receiver's pro-rata plan of distribution and denying Weathervane's motion to distribute funds and to rescind the ex parte order appointing the receiver. Plaintiff appeals as of right from those orders.
Plaintiff first contends that the appointment of a receiver was an inappropriate exercise of the trial court's equitable jurisdiction because there was no pending suit to which K & G's petition could be considered ancillary and the circumstances did not warrant it. We disagree. The power to appoint receivers is inherent in courts of equity. Michigan Minerals, Inc. v. Williams, 306 Mich. 515, 11 N.W.2d 224 (1943). A receiver may be appointed where necessary to prevent fraud or to protect property against imminent danger of loss. 65 Am.Jur.2d, Receivers, Sec. 27, p. 879. The primary purpose of a receiver is to preserve property and to dispose of it under order of the court. Band v. Livonia Associates, 176 Mich.App. 95, 439 N.W.2d 285 (1989). Circuit judges, in the exercise of their equitable...
To continue reading
Request your trial
-
DiPonio Constr. Co. v. Rosati Masonry Co.
...act is remedial in nature, it should be construed liberally for the advancement of the remedy. Weathervane Window, Inc. v. White Lake Constr. Co., 192 Mich.App. 316, 325, 480 N.W.2d 337 (1991); Miller, supra at 343, 259 N.W.2d IV. Applicable Limitation Period The parties urge this Court to ......
-
Trs. the Detroit Carpenters Fringe Benefit Funds v. Nordstrom
...in nature, it should be construed liberally for the advancement of the remedy. Id. (citing Weathervane Window, Inc. v. White Lake Constr. Co., 192 Mich.App. 316, 325, 480 N.W.2d 337 (1991)). To make out a claim for violation of the MBTFA, the plaintiff must show (1) the defendant is a contr......
-
People v. Whipple, Docket No. 155561
...§ 570.151 et seq.; M.S.A. § 26.331 et seq., provides for both a civil and a criminal remedy. Weathervane Window, Inc. v. White Lake Construction Co., 192 Mich.App. 316, 325, 480 N.W.2d 337 (1991); James Lumber Co., Inc. v. J. & S. Construction, Inc., 107 Mich.App. 793, 795, 309 N.W.2d 925 (......
-
Marketplace of Rochester Hills v. Comerica Bank
...was necessary to prevent fraud or to protect against the imminent danger of property loss. Weathervane Window, Inc. v. White Lake Constr. Co., 192 Mich.App. 316, 322, 480 N.W.2d 337 (1991).In contrast, to establish a right to judicial foreclosure, Comerica would have to establish that it me......