Wilson Leasing Co. v. Seaway Pharmacal Corp., Docket No. 15250

• Decision Date: 29 May 1974
• Docket Number: No. 3,Docket No. 15250,3
• Citation: 53 Mich.App. 359,220 N.W.2d 83
• Parties: , 14 UCC Rep.Serv. 1483 WILSON LEASING COMPANY, an Illinois corporation, Plaintiff-Appellant, v. SEAWAY PHARMACAL CORPORATION, a Michigan corporation, et al., Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

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220 N.W.2d 83 53 Mich.App. 359, 14 UCC Rep.Serv. 1483 WILSON LEASING COMPANY, an Illinois corporation, Plaintiff-Appellant,
v.
SEAWAY PHARMACAL CORPORATION, a Michigan corporation, et
al., Defendants-Appellees. Docket No. 15250. Court of Appeals of Michigan, Division No. 3. May 29, 1974.
Released for Publication July 23, 1974.

[53 Mich.App. 361]

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Seymour I. Rosenberg, Muskegon, for plaintiff-appellant.

William J. Balgooyen, Jr., Muskegon Heights, for defendants-appellees.

Before R. B. BURNS, P.J., and DANHOF and O'HARA* JJ.

O'HARA, Judge.

This case was originally assigned to Judge R. B. Burns for the preparation of the [53 Mich.App. 362] Court's opinion. He has fully set forth the necessary facts and we agree with his opinion except as to the holding concerning the application of the funds paid over by the individual guarantors of corporate debts.

We do not read Chris Nelsen & Son, Inc. v. Shubow, 374 Mich. 403, 132 N.W.2d 122 (1965), as does our colleague. True, there is language in Shubow which tends to obscure its basic decisional holding.

The fact situation in the case at bar is so essentially different from that in Shubow that the difference renders the case inapposite--whatever the legal effect of the opinion may be.

In this case the corporate officers personally guaranteed two specific leases. They made certain payments to Wilson pursuant to that guaranty. Wilson applied, as Judge Burns correctly notes, the bulk of these payments to the two guaranteed leases. For some inexplicable reason Wilson applied $777.70 to the balance due on two leases which were not guaranteed. This was totally impermissible. Whatever Shubow says about crediting payments made, the application of which is unspecified, it certainly does not say the guarantors can become liable for a payment they did not guarantee. Thus we hold that on remand the trial judge is to credit the $777.70 to the amount due on the two leases which were individually guaranteed.

Subject to the foregoing exception we join in the reversal and remand, and the award of no costs.

DANHOF, J., concurring.

R. B. BURNS, Presiding Judge (concurring in part, dissenting in part).

Seaway Pharmacal Corporation (hereinafter Seaway), corporate defendant herein, obtained [53 Mich.App. 363] numerous pieces of office and manufacturing equipment from Wilson Leasing Company (hereinafter Wilson). The equipment was obtained in four distinct lots, each the subject of a distinct, but identical, 5-year lease. ¹ The two larger leases were personally guaranteed by the individual defendants herein. All four

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leases were defaulted. After some extensions and a few payments by two of the guarantors, Wilson took possession of all the equipment, sold it, applied the proceeds to the balance due on each lease, and then brought this action against Seaway and the individual defendants for the deficiency, including expenses and attorneys' fees. The circuit judge, sitting without a jury, entered judgments for Wilson against all defendants, but in amounts considerably less than those sought by Wilson. Wilson appeals, claiming that the judgments are inadequate. The individual defendants, but not Seaway, cross appeal, claiming that the judgment against them is excessive.

The particulars of the leases, guaranties, and transactions at issue herein will be detailed below as pertinent to our discussion and resolution of the several claims of error advanced by the parties:

The Pleadings

Wilson invokes M.C.L.A. § 600.2145; M.S.A. § 27A.2145, to support its claim that the circuit judge was without authority to enter judgments in any amounts other than those prayed for by Wilson in its complaint. We agree with the circuit judge that the cited statute is inapplicable to the instant case.

[53 Mich.App. 364] The cited statute provides that, if the plaintiff in an action to recover the amount due upon an open account or an account stated serves upon the defendant, in addition to a copy of the complaint, an affidavit of the amount due on the account, And a copy of the account, and if the defendant does not then respond with an affidavit of denial, the plaintiff's affidavit is deemed prima facie evidence of the amount due. Admittedly, defendants herein did not file an affidavit of denial. However, Wilson did not comply with the statute and file a copy of the account. Defendant's failure to file an affidavit of denial did not render Wilson's affidavit prima facie evidence of the indebtedness. ²

Interest

Paragraph 18 of each of the leases provided, in part, that 'delinquent installments of rent shall bear interest at the highest lawful contract rate or 1% Per month, whichever be the lesser'. In calculating the deficiency Wilson included in the balances due on the leases interest at the rate of one per cent per month on those installments of rent past due and unpaid at the time of disposition; that interest totalled $3,288.04 on the guaranteed leases and $522.55 on the unguaranteed leases. The circuit judge refused to allow such interest, holding that Wilson 'has already contracted its interest'.

The rentals due on the four leases totalled $79,224.15 to be paid in equal installments over 5 years. The equipment which was the subject of those leases cost Wilson a total of $52,349.54...