Dеfendants appeal from orders of the Oakland Circuit Court appointing a receiver, granting partial summary disposition to plaintiffs pursuant to GCR 1963, 117, now MCR 2.116, and dissolving defendant Livonia Associates, a Michigan limited partnership. Defendants raise several claims of error. Finding no issue which merits reversal, we affirm.
Plaintiffs held limited partnership interests in defendant Livonia Associates (partnership). Defendants Robert Horvath and Cornel Peleo were the general partners. On July 19, 1970, C & R Investment Company, Inc. (c & R) entered into a purchase agreement with a group of sellers known as the Morganroth Group for a 115-acre parcel of land in Livonia (Lot No. 1). The sole stockholders of c & r were defendants Horvath and Peleo. The agreement provided for a purchase price of $1,000,000 with a $15,000 deposit to be credited to the purchase price when the sale was completed.
On February 19, 1971, the partnership was formed. Its purpose was to acquire, hold, develop, improve and manage for investment Lot No. 1. Horvath and Peleo, as general partners, were
On February 22, 1971, three transactions occurred. First, c & R entered into a land contract with the Morganroth Group to purchase Lot No. 1. The purchase price was $1,000,000 with an initiаl payment of $200,000. The balance was payable in yearly installments with interest at eight percent per annum. On that same day, c & R assigned its purchaser’s interest in the land contract to defendants Cornel Peleo and his wife, Viora Peleo. Also on February 22, 1971, Peleo and his wife entered into a land contract with the partnership to sell Lot No. 1 for $1,265,000 with an initial payment of $295,000, the balance payable in yearly installments with interest at eight percent per annum. Defendant Belcrest Realty Company, a sole proprietorship owned by defendant Horvath, received a sales commission of approximately $80,000 in connection with the sale to the partnership.
On Deсember 3, 1971, Peleo and his wife purchased a second parcel of land (Lot No. 2) by land contract for $9,000 with an initial payment of $3,000. On April 15, 1972, the Peleos sold Lot No. 2 to the partnership by land contract for $18,000 with an initial payment of $6,000.
Plaintiffs filed a complaint on April 27, 1977, alleging that Horvath and Peleo had neglected to properly perform their duties as general partners by: failing to maintain the residence on the partnership property, resulting in a loss of rental income; failing to pay real estate taxes on Lot No. 1 in 1974, 1975 and 1976, resulting in the danger of the lot’s being sold at a state tax sale on May 7, 1977; failing to make the land contract payment; refusing to provide plaintiffs аccess to partnership
I. Plaintiffs asked for an accounting and payment of the secret profit. Plaintiffs also requested that the court appoint a receiver to take possession and cоntrol of the partnership’s assets.
On June 8, 1977, the trial court denied plaintiffs’ motion for appointment of a receiver. The parties were ordered to deposit their 1977 capital contributions with a specified escrow agent who would apply the sums to the past due payment on the Lot No. 1 land contract. Horvath and Peleo were also ordered to produce the books and records of the partnership. On August 3, 1977, the court entered an order determining that defendants Horvath and Peleo and an added defendant, Michael J. Hand, a limited partner, had not complied with the June 8, 1977, order.
On October 28, 1977, the trial court granted plaintiffs’ motion to appoint а receiver. The receiver was authorized to stand in the place of the general partners, collect contributions and disburse funds, make a thorough investigation, and hire an accountant and legal representative to assist him.
On February 3, 1978, the trial court entered an order allowing plaintiffs to amend their complaint. Plaintiffs added Belcrest Realty as a defendant and information regarding the acquisition of Lot No. 2. Count hi alleged that Viora Peleo had not contributed any money to the acquisition of Lot
On April 26, 1978, the trial court, pursuant to the receiver’s motion, ordered Peleo and his wife to assign their purchasers’ interest in the land contract between c & k and the Morganroth group to the partnership, assign their sellers’ interest in the land contract between the Peleos and the partnership to the partnership, and execute a quitclaim deed to the partnership. The court also directed the receiver to withhold the commission payment of $22,500 to Horvath, doing business as Belcrest Realty, and apply it to Horvath’s $18,600 capital contributiоns debt.
On July 5, 1978, the complaint was amended to allow plaintiffs to seek dissolution of the partnership. On July 10, 1978, defendants brought a motion to dismiss the receiver because the order appointing the receiver failed to require a bond. Defendants argued that, because the receiver was not duly appointed, the October 28, 1977, order appointing the receiver and the subsequent actions of the receiver were null and void. The court denied the motion and entered an order nunc pro tunc requiring that the receiver post a bond.
The court granted partial summary judgment to plaintiffs on August 23, 1978, holding that Horvath and Peleo had a duty to disclose to the partnership the profit made on both lots and that they breached that duty. Horvath and Peleo were ordered to hold, as trustees for the partnership, all benefits and profits derived from the sale of Lot No. 1 to the partnership.
On May 30, 1979, the court denied defendants’
On June 4, 1980, defendants moved to dismiss counts ii and m of the complaint. The trial court denied the motion as to count n because the relief had already been granted. The trial court dismissed count in.
The land was eventually sold for an aggregate amount of $1,830,000. On September 7, 1982, the court denied Belcrest Realty’s claim against the partnership on the ground that it was untimely filed. On February 4, 1983, the court denied Horvath’s and Peleo’s claims against the partnership because the partnership agreement did not provide that the general partners should be compensated for management of the affairs of the partnership.
On December 18, 1985, the court authorized the receiver to distribute money from the sale to the partners. The court also authorized the receiver to continue to collect the land contract payments and make annual distributions to the partners.
This appeal was filed on December 9, 1986. On May 1, 1987, plaintiffs filed a motion to require a complete filing of the transcript, but did not specify which transcripts were missing. On May 27, 1987, this Court entered an order compelling defendants to file a complete transcript. After an exhaustive search of the files, however, we have determined that many transcripts are missing.
The record on appeal consists of, inter alia, the transcript of any testimony or other proceedings in the case appealed. MCR 7.210(A)(1). Appellants have a duty to file with the trial court the full
i
Defendants’ first four issues are concerned with the appointment of the receiver. First, defendants claim that the trial court abused its discretion when it appointed a receiver. We disagree. The power to appoint receivers is inherent in courts of equity.
Michigan Minerals, Inc v Williams,
Circuit court judges in the exercise of their equitable powers, may appoint receivers in all cases pending where appointment is allowed by law. This authority may be exercised in vacation, in chambers, and during sessions of the court. In all cases in which a receiver is appointed the court shall provide for bond and shall define the receiver’s power and duties where they are not otherwise spelled out by law. Subject to limitations in the law or imposed by the court, the receiver shall be charged with all of the estate, real and personal debts of the debtor as trustee for the benefit of the debtor, creditors and others interested.
The statute provides that circuit court judges
We find no error in the court’s appointment of a receiver. Less intrusive means were attempted when, on June 8, 1977, the court entered an order that the parties pay the full amount of their 1977 capital contributions to a specified escrow agent by June 4, 1977. However, defendants Horvath, Peleo and Hand did not comply with the court’s order. Horvath and Peleo were each delinquent in their capital contributions by approximately $22,000. Both Horvath and Peleо stated that they were unable to comply with their financial obligations. A court has the basic responsibility of enforcing its own orders and has considerable discretion in choosing the means to be employed.
Butler v Butler,
The trial court recognized that serious, immediate and irreparable harm would occur if a receiver were not appointed. Defendants admitted that
Defendants claim that the court should have conductеd a full evidentiary hearing before ruling on the motion to appoint a receiver. Defendants cite
Petitpren
for the proposition that the appointment of a receiver without an evidentiary hearing is erroneous. In
Hofmeister v
Randall,
Due to the harsh nature of a receivership, a court must proceed carefully before deciding that the circumstances warrant such remedy. Therefore, an evidentiary hearing may often be necessary before a court exercises its inherent equitable authority to appoint a receiver. Petitpren, supra,104 Mich App 297 . However, Petitpren also suggested that such a hearing would be unnecessary if the facts were totally uncontrоverted and the actual conditions were established. Id.
In the instant case, no material factual dispute existed. The important facts were uncontroverted. Defendants do not indicate what additional evidence they would have presented to refute the uncontroverted facts. We conclude that the actual conditions were established which necessitated the appointment of a receiver.
The receiver was appointed on October 28, 1977. On May 25, 1978, defendants filed a motion to remove the receiver because of the failure to post bond. On July 10, 1978, following a hearing, the trial court amended its previous order nunc pro tunc and required that the receiver post a $50,000 bond as stipulated to by the parties. The bond was
There is no Michigan case law which hаs dealt with the effects of a court’s failure to provide for a bond under the statute. See
Smith v Menominee Circuit
Judge,
Defendants next claim, citing several instances, that the trial court permitted the receiver to act outside the scope of his powers. We disagree.
In Westgate, supra, p 91, our Supreme Court held:
A receiver is sometimes said to be the arm of the court, appointed to rеceive and preserve the property of the parties to litigation and in some cases to control and manage it for the persons or party who may be ultimately entitled thereto. A receivership is primarily to preserve the property and not to dissipate or dispose of it.
The duty of a receiver is not to litigate as between the adverse parties, but, under the order of the court, to preserve and care for the property and turn it over to the person who is ultimately decided to be entitled thereto.
Defendants allege that the trial court allowed the receiver to exceed the scope of his authority by withholding a commission payable to Belcrest Realty in satisfaction of Horvath’s unpaid capital contributions. We disagree. Pursuant to the receiver’s motion, after the April 26, 1978, hearing, the
When persons other than the receiver have property in their hands which should be in the hands of the receiver, or when any person diverts or attempts to divert from the receiver property which belongs to the receiver, the receiver may take all appropriate steps in law and equity to reduce such property to possession and protect it from being diverted from its lawful custodian.
Pontiac Trust Co v Newell,
Defendants next claim that the receiver acted outside the scope of his authority when he filed a motion requesting that the court order the Peleos to assign and convey their land contract interest in Lot No. 1 to the partnership. Again, we disagree. The receiver was in the process of selling a portion of Lot No. 1 and, in order to close the transaction, the partnership had to acquire title. The funds from the sale would be used to discharge the underlying contract on Lot No. 1 with the Morganroth Group and to pay back taxes. Without an assignment of the land contract, the partnership would have had to use its money for the nonpartnership purpose of vesting title to Lot No. 1 in the Peleos. We conclude that the receiver
We reject defendants’ argument that the receiver adopted the position of the plaintiffs in violation of his duty to the partnership. We conclude that the receiver was acting in the best interest of the partnership. This interest at times coincided with the position of plaintiffs, but did not evidence an improper bias by the receiver.
Next, defendants argue that the receiver exceeded his authority because he acted as an attorney for the partnership. The court’s order appointing the receiver authorized him to hire legal representation when he deemed necessary. Instead of hiring separate legal representation, the receiver used his own expertise as an attorney to file motions, review contracts and the like. We conclude that, in performing these tasks, the receiver was not acting as an attorney for the partnership but was acting in conjunction with his duties as a receiver. This was clearly within the receiver’s scope of authority.
A receiver is under no legal duty to perform legal services for the benefit of the estate committed to his charge. Where the necessity for legal counsel arises, the court may provide the receiver with counsel. The necessity for the employment of counsel must be cleаrly apparent. Where the receiver himself is a lawyer, he should not employ other counsel except in an extraordinary case, as where unusual complications arise. 75 CJS, Receivers, § 161. It is the plain duty of such receiver-attorney to render legal services to the estate himself and save the estate a duplication of attorney fees. 66 Am Jur 2d, Receivers, § 294.
Finally, defendants contend that the trial court abused its discretion in approving the fees of the
n
On August 23, 1978, the trial court granted plaintiffs’ motion for partial summary judgment, holding that Horvath and Peleo had a duty to disclose to the partnership the profit they realized on the sale of both lots and that they breached that duty. Horvath and Peleo were ordered to hold, аs trustees for the partnership, all benefits and profits derived from the sale of Lot No. 1 to the partnership. Defendants claim that the trial court erroneously granted partial summary disposition to plaintiffs. We disagree.
The motion for partial summary judgment was granted pursuant to GCR 1963, 117.2(3), now MCR 2.116(0(10), that there was no genuine issue of material fact. When ruling on a motion for summary judgment under GCR 1963, 117.2(3), the affidavits, pleadings, depositions and other documentary evidence must be considered by the court. The party opposing the motion must come forward with some proof to establish the existence of an issue of material fact.
Bennison
v
Sharp,
The duty of the general partners in this case is based on §§ 20 and 21 of the Uniform Partnership Act:
Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or partner under legal disability. MCL 449.20; MSA 20.20.
(1) Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property;
(2) This section applies also to the representatives of a deceased partner engaged in the liquidation of the affairs of the partnership as the personal representatives of the last surviving partner. [MCL 449.21; MSA 20.21.]
Defendants claim, however, that there was a genuine issue of material fact as to whether they failed to disclose. On Fеbruary 20, 1985, defendants filed a motion to set aside the partial summary judgment. In support of this, on March 15, 1985, defendants filed three affidavits wherein three limited partners, one being Hand, stated that they had been told that Lot No. 1 had been previously acquired by defendants for $1,000,000. Defendants aver that, under MCL 449.12; MSA 20.12, notice to any partner operates as notice to or knowledge of the partnership. We disagree. Defendants’ reliance on § 12 of the act is misplaced. Section 12 comes under part in of the act which concerns relations of partners to third persons dealing with the partnership, whereas defendants’ duty to disclose comes under part iv of the act which cоncerns the relations of partners to one another.
The courts universally recognize the fiduciary relationship of partners and impose on them obligations of the utmost good faith and integrity in their dealings with one another in partnership affairs. Partners are held to a standard stricter than the morals of the marketplace and their fiduciary duties should be broadly construed, "connoting not mere honesty but the punctilio of honor most sensitive.” 59A Am Jur 2d, Partnership, § 420, p 453. The fiduciary duty among partners is generally one of full and frank disclosure of all relevant information. Each partner has the right
hi
On April 4, 1980, following a bench trial, the trial court ordered dissolution of the partnership based upon MCL 449.32(l)(b), (c) and (d); MSA 20.32(l)(b), (c) and (d), which states:
(1) On application by or for a partner the court shall decree a dissolution whenever:
(b) A partner becomes in any other way incapable of performing his part of the partnership contract,
(c) A partner has been guilty of such conduct as tеnds to affect prejudicially the carrying on of the business,
(d) A partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him.
Defendants claim that the trial court erred in ordering dissolution of the partnership because there was insufficient evidence on which dissolution could be based. We disagree. The trial court found that there was dissension and acrimony among the partners, that the purposes of the
Defendants also contend that the trial court erred by failing to determine the interests of the partners in the order of dissolution. We disagree. The partnership аgreement contained a schedule of the partners’ interests. There is no requirement that such determination must be made part of an order of dissolution, although the court may do so on the basis of the proofs presented absent an express agreement for a different method of determination.
Gertz v Fontecchio,
IV
Defendant Viora Peleo was added as a defendant in plaintiffs’ second amended complaint. On April 26, 1978, the trial court, pursuant to a motion by the receiver, ordered the Peleos to assign their purchasers’ and sellers’ land contract interests in Lot No. 1 and to quitclaim their interest in the lot to the partnership. The order also provided that the execution of the assignments and the quitclaim deed would not affect any claim or right of the Peleos to any money which might be due from the partnership. The receiver had recognized the
A hearing was held on June 4, 1980, on the Peleos’ motion to dismiss counts n and m of plaintiffs’ second amended complaint. Plaintiffs objected to dismissing Viora Peleo because of her possible claim against the partnership, reserved by the April 26, 1978, order.
On September 3, 1980, the court entered an order dismissing count iii of the complaint, which alleged that Viora Peleo did not contribute any money to the acquisition of the land and which sought reformation of the land contract.
Defendants now claim that Viora Peleo’s due process rights were violated because her property interest was abrogated without notice or a hearing. We disagree. Viora Peleo was represented by counsel on both April 26, 1978, and June 4, 1980. In fact, on June 4, 1980, Viora Peleo’s attorney stated that Viora Peleo sought to be dismissed from the case and sought no claim or recovery. The attorney stated that plaintiffs’ objection to her dismissal on the grounds that she had a claim against the partnership was a "red flag.” The court ordered that count hi be dismissed and "that with regards to Mrs. Peleo, she does not seek any rights or relief under what’s been heretofore entered.” Both parties agreed that the court’s interpretation was correct.
However, in the order of September 3, 1980, the language which stated that Viora Peleo had abandoned her claim was crossed out. Thus, Viora Peleo’s possible claim of right to any money owed to her by the partnership has been preserved. Viora Peleo has not been deprived of her interests without a hearing and, thus, her due process rights have not been violated.
The third receiver’s report filed on July 20, 1981, contained claims for compensation by Horvath and Peleo for hours expended as general partners in managing and conduсting partnership business. On September 2, 1981, the court entered an order stating that the last date for filing claims would be September 16, 1981. On February 17, 1982, Belcrest Realty filed a motion to allow its claim for approximately $295,000 for expenses and services rendered to the partnership, pursuant to the partnership agreement.
On August 12, 1982, the court barred the Belcrest Realty claim because it was not timely filed, but stated that it would consider Horvath’s and Peleo’s claims.
A hearing on these claims was held on September 7, 1982. The court found that the claims of Horvath and Peleo were claims for recovery of services performed as managers of the partnership. Because the agreement contained no provision for compensation to general partners, their claims were denied by order of February 4, 1983.
Defendants now argue that the trial court erred in denying defendants’ claims for services rendered to the partnership. We disagree. The trial court did not err in denying Belcrest Realty’s claim on the ground that it was untimely. Belcrest Realty clearly had notice of the deadline for filing claims, but did not file its claim until after the deadline set by the court. The court did not err in denying the claims of Horvath and Peleo on the ground that the partnership agreement did not provide for compensation. A partner is not entitled to compensation for sеrvices performed on behalf of the partnership unless the express terms of the agreement provide for such compensation. MCL
VI
On May 30, 1979, defendants brought a motion to disqualify the trial judge pursuant to GCR 1963, 912.2(2). Defendants claimed that the trial court had prejudged trial issues. This motion was not timely, a factor which may be used to decide whether the motion should be granted. GCR 1963, 912.3(a). Defendants’ motion could have been denied on the basis of untimeliness.
People v Bettistea,
The record reflects that over the nine years that this case was before the court, the trial judge exercised extreme patience and courtesy toward the parties. Decisions were made on the basis of the facts and law before the court. The record is devoid of any actual bias or prejudice on the part of the trial judge.
Affirmed.