Whitcraft v. Wolfe
| Decision Date | 04 April 1986 |
| Docket Number | Docket No. 80231 |
| Citation | 384 N.W.2d 400,148 Mich.App. 40 |
| Parties | Michael WHITCRAFT, Plaintiff-Appellee, v. Steven WOLFE, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Richard M. Goodman, P.C. by Jonathan L. Walker, Detroit, for plaintiff-appellee.
Paul E. Slavin, Detroit, for defendant-appellant.
Before GRIBBS, P.J., and T.M. BURNS and WARSHAWSKY, * JJ.
Defendant, Steven Wolfe, appeals as of right from an order requiring him to endorse the title of a 1963 AC Cobra sports car to plaintiff Michael W. Whitcraft and to extinguish all security interest in it. We set aside the circuit court order and remand for further proceedings.
This case has a rather unusual procedural history. On March 19, 1984, Wolfe filed a complaint against Sports Cars of Birmingham, Inc (hereinafter referred to as Sports Cars) and Herb Singerman, one of Sports Cars' owners. Wolfe alleged that on November 14, 1983, Sports Cars agreed to purchase the Cobra from Wolfe for $57,000 with payment to be made by March 1, 1984, that he retained a lien on the car, and that he received only $5,000 of the purchase price. In Count I of the complaint, Wolfe set forth a contractual claim for $52,000. In Count II, Wolfe set forth a claim, the exact nature of which is unclear. In that count, Wolfe sought "return of the vehicle". However, he did not clearly indicate whether his claim was based on an ownership theory or whether it was based on his security interest in the vehicle. While the count was entitled "Replevin" and he alleged that he was the owner, he also alleged that he was the primary lienholder and that he was entitled to a return of the vehicle pursuant to his security interest. 1 Additionally, Wolfe alleged the possibility that the vehicle had been transferred to a third party.
Sports Cars and Singerman failed to answer and a default was entered against them. On May 15, 1984, the circuit court entered a "partial" default judgment, ordering that possession of the Cobra be returned to Wolfe and granting authority for an officer of the law to seize the vehicle wherever it was found. The remainder of Wolfe's complaint was continued, pending return of the Cobra and an assessment of its possible diminished value and the expenses of recovery.
Meanwhile, Whitcraft had apparently purchased the Cobra from Sports Cars. Wolfe discovered this and took the court order to Whitcraft demanding return of the Cobra. On May 18, 1984, Whitcraft moved to set aside the order for the return of the car to Wolfe, arguing that he had not been a party to the action and, furthermore, that he was a buyer in the ordinary course of business with a consequent superior right to the Cobra. 2 Before the court took any action, Wolfe amended his complaint adding a third count which alleged fraud on the part of Singerman and Sports Cars. Wolfe alleged that in return for a fraudulent promise to pay him $57,000, he "did part with the title to said automobile". He alleged that at the time that Singerman made the representation to pay the entire $57,000 by March 1, 1984, he (Singerman) knew the statement was false and had no intention to make full payment. Wolfe had received two $3,000 checks from Singerman, both of which were dishonored. Wolfe now sought damages of $57,000 from Singerman and Sports Cars.
On July 10, 1984, in a separate action, Whitcraft filed a complaint for declaratory relief, naming Wolfe as defendant. He asked the court to declare that he was a buyer in the ordinary course of business who took good title to the vehicle. He alleged that he purchased the Cobra from Sports Cars in good faith and for a valuable consideration with no knowledge of Wolfe's security interest; that he received the Cobra and a title signed by Wolfe, but was unable to obtain a clear title because Wolfe had fraudulently obtained a duplicate title with full knowledge of Whitcraft's purchase by claiming that the original had been lost; and that Wolfe subsequently granted a security interest in the Cobra to another individual (his sister) after learning of Whitcraft's purchase. Whitcraft asked the court to order Wolfe to extinguish all interest in the Cobra and sign over the title to Whitcraft. The circuit court ordered Whitcraft's action against Wolfe to be consolidated with the original action by Wolfe against Sports Cars and Singerman. However, Wolfe thereafter raised no claim against Whitcraft and Whitcraft raised no claim against Sports Cars.
Wolfe filed a second default against Sports Cars and Singerman on July 12, 1984, and a hearing was held in regard to the fraud claim on July 18, 1984. 3 Wolfe testified that the Cobra was worth approximately $60,000. He was told by Singerman that to complete the sale and to maintain possession, Sports Cars was required by law to have the car's certificate of title endorsed in blank and given to them, which defendant did. After signing the title, he requested certification of a lien in his favor, on the advice of an attorney, and Sports Cars gave him such a document. The lien and title transfer were never registered with the Secretary of State. When Wolfe later requested return of the title, he was told that it was lost. Wolfe received only $5,000 for the car and felt that a balance of $52,000 was owing. The trial court found fraud and granted Wolfe a default judgment against Singerman and Sports Cars for $52,000, $60 costs, and interest of $1,709.25 to date. The first default judgment granting Wolfe possession of the vehicle was not set aside.
Wolfe then moved for summary judgment in regard to Whitcraft's claim against him, contending that Whitcraft had no interest in or title to the Cobra, as he never received a properly endorsed certificate of title. Wolfe noted that an evidentiary hearing was scheduled on Whitcraft's motion to set aside the order to return the car. When the evidentiary hearing was held, it encompassed not only the evidentiary claims of Whitcraft, but also Wolfe's proposal for summary judgment. After much testimony, the court noted that the party causing the problem, Sports Cars, was not before the court but, nevertheless, rendered a decision in the matter. The court balanced the equities with respect to both litigants, considered the testimony and credibility of the witnesses, and made findings of fact. The trial court found that Wolfe and Sports Cars entered into an agreement regarding payment. Wolfe turned over a signed title that could mislead a prospective purchaser and agreed that he would not receive his money until March, 1984. In the absence of this agreement, the court would have found that Sports Cars' fraud prevented any transfer to Sports Cars. Since Wolfe entered into the agreement, the court reluctantly found that Whitcraft should prevail and receive the Cobra with clear title. The court filed an order entitled "Summary Judgment", requiring Wolfe to endorse the title to the Cobra over to Whitcraft and to extinguish all security interests in the car. The court also entered judgment for Wolfe against Sports Cars and Singerman for $62,000.
We find that the trial court acted improperly in granting summary judgment in favor of Whitcraft in regard to his claim against Wolfe. While a court may render summary judgment in favor of the party opposing the motion rather than the moving party, see GCR 1963, 117.3, summary judgment was not proper in this case.
One barrier to summary judgment arises from the fact that Sports Cars was not notified of the claim set forth in Whitcraft's complaint for declaratory relief. Sports Cars was a necessary party with a definite interest in the subject matter and whose presence was essential to permit the court to render complete relief. Thus, Sports Cars should have been a named defendant in the lawsuit. While Whitcraft's cause of action was later consolidated with Wolfe's cause of action against Sports Cars, the record contains no indication that Sports Cars was ever notified of Whitcraft's claim and its possible effect on Sports Cars' interests.
Secondly, summary judgment pursuant to GCR 1963, 117.2(3) is proper only if there is no genuine issue as to any material fact and the party in whose favor judgment is granted is entitled to judgment as a matter of law. In addition to the fact that Sports Cars might possibly raise genuine issues of fact, the trial court acted improperly in holding an "evidentiary hearing" for summary judgment purposes. A motion based on GCR 1963, 117.2(3) is designed to test the factual support for a claim. Maccabees Mutual Life Ins. Co. v. Dep't of Treasury, 122 Mich.App. 660, 663, 332 N.W.2d 561 (1983), lv. den. 417 Mich. 1100.15 (1983). The court must consider the pleadings, affidavits, and other available evidence and be satisfied that the claim or position asserted cannot be supported by evidence at trial because of some deficiency which cannot be overcome. Maccabees Mutual Life Ins. Co., supra. The court must give the benefit of any reasonable doubt to the party opposing the motion and inferences are to be drawn in favor of that party. Maccabees Mutual Life Ins. Co., supra. Questions turning on the credibility of witnesses cannot be resolved by summary judgment. Kohn v. Mandell, 17 Mich.App. 653, 655, 170 N.W.2d 261 (1969). No authority exists in either the General Court Rules of 1963 or the Michigan Court Rules of 1985 allowing a court to take the testimony of witnesses pursuant to a summary judgment motion. A trial court must avoid substituting a trial by affidavit and deposition for a trial by jury. Northern Plumbing & Heating, Inc. v. Henderson Brothers, Inc., 83 Mich.App. 84, 90, 268 N.W.2d 296 (1978), lv. den. 405 Mich. 845 (1979). Use of an evidentiary hearing in this case impermissibly combined summary judgment and trial procedure. Efficiency in the judicial process is not fostered if a judge must preside over the taking of...
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