Court Opinion

ID: 9658877
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:20:00.715978+00
Date Added: 2024-06-11T18:14:01.015429
License: Public Domain

Quinn, J.
Plaintiffs brought an action in common pleas court of Detroit to recover from defendants' the amount of a deposit plaintiffs made on a contract with the corporate defendant, which was not fulfilled by the corporation. In count 1 of their declaration, plaintiffs sought recovery of $3,000 on the theory that the contract was void and unenforceable. In count 2, they sought recovery of $2,800. The latter figure mistakenly represented the deposit less $300' stipulated damages provided for in the contract. The individual defendants were joined under the provisions of CL 1948, § 450.87 (Stat Ann 1963 Rev § 21.87). Plaintiffs appeal from a judgment of no cause of action in favor of all defendants.
Plaintiffs contracted with the corporate defendant for the construction of a home on land to be acquired for them by the builder. At the time of the contract, the powers of the corporate defendant were suspended for failure to file its annual report and pay fees as required by section 450.87, supra. Eventually, plaintiffs purchased property and had another builder construct their home. The corporate defend*582ant claimed at trial and claims here that it expended more than $3,000 for the benefit of plaintiffs and pursuant to contract prior to the time plaintiffs started acting for themselves. The trial judge made no finding on this point, and the record before us is such that we are unable to make such a finding.
Section 450.87, supra, provides:
“(1) If any corporation neglects or refuses to make and file the reports and/or pay any fees required by this act within the time herein specified, and shall continue in default for 10 days thereafter, unless the secretary of state shall for good cause shown extend the time for the filing of such report or the payment of such fee, as the case may be, as provided in section 91 of this act, and (2) if such corporation shall continue in default for 10 days after the expiration of such extension, its corporate powers shall be suspended thereafter, until it shall file such report, and it shall not maintain any action or suit in any court of this state upon any contract entered into during the time of such default; but nothing herein contained shall prevent the enforcement of such contract against the corporation by the other party thereto, and during the period of such suspension such corporation may exercise the power of disposing of and conveying its property and may settle and close its business. Any officer or officers of such corporation so in default who has neglected or refused to join in making of such report and/or pay such fee shall be liable for all debts of such corporation contracted during the period of such neglect or refusal.”
The contract was unenforceable by the corporation so long as it was in default. Industrial Coordinators, Inc., v. Artco, Inc. (1962), 366 Mich 313. The corporate defendant is still in default and plaintiffs do not seek to enforce the contract, but by this action they rescinded. Among other things, rescission in*583volvcs a restoration of the status quo, Wall v. Zynda (1938), 283 Mich 260, and as to both parties. Kundel v. Portz (1942), 301 Mich 195, 210. The insufficiency of the record prevents us from determining what is status quo in this case, but the corporate defendant shall be entitled to retain that part of the $3,000 which represents expenditures pursuant to the contract and which are of no further value to that defendant.
There is sufficient evidence in the record to support a finding that the failure to file the report was due to the neglect of the officers at the time. Except for defendant Griffin, such a finding supports the liability of the individual defendants under the statute, supra, if what is involved here is a debt contracted during the period of neglect.
In Lockhart v. Van Alstyne (1875), 31 Mich 76, 78, “debt” is defined as follows:
“Liabilities of a company which may give causes of action against it and result in judgments are not within the statute unless they constitute present debts. A debt is that which one person is bound to pay to another, either presently or at some future period; something which may be the subject of a suit as a debt, and not something to which the party may be entitled as damages in consequence of a failure to perform a duty or keep an engagement.”
This supports our holding that involved here is a debt contracted during the period of neglect.
The trial judge dismissed the case as to defendant Griffin before he rendered an opinion on the principal issues in the case. That determination is supported by the record. Mr. Griffin had tendered his resignation as secretary of the corporation but not as a director before he departed in 1957 for a 5-year assignment in Africa. Although the record *584does not indicate that Griffin resigned as a director, directors have no personal liability under the statute, supra.
The contention of the corporate defendant and defendant Burke that this action is barred by the 2-year statute of limitations found in CL 1948, § 450.90 (Stat Ann 1963 Rev § 21.90) is not properly before us. Rule 9, § 4, common pleas court, requires that such an affirmative defense be plainly set forth in the defendant’s answer. This defense was first raised below during final argument and the trial court did not rule on it.
Reversed and remanded for a determination of the amount the corporate defendant should be required to repay to plaintiffs and for a determination of the personal liability of the individual defendants, except Griffin. Plaintiffs may recover costs.
J. H. Gillis, J., concurred with Quinn, J.