199 Mich. 41 | Mich. | 1917
The Bar Point Land Company, Limited, defendant, is a foreign corporation organized for the purpose of establishing and maintaining a Masonic summer resort at Bar Point, Ontario, and incorporated in January or February, 1913, under the laws of the province of Ontario. The other defendants are, or were when this suit was begun, its officers and directors, nine of whom were residents of Detroit.
Bar Point is on the north shore of Lake Erie about four miles below the city of Amherstburg in the province of Ontario near the mouth of the Detroit river. A tract of land consisting of about 620 acres known as the McBride farm is located at this point. Defendant Le Heup, a jeweler of Detroit, bought this farm in 1912 from the McBrides on a land contract for $20,-000, assisted by his wife, as he states, and defendant
“This little book lets you into the secret of Masonic Park, at Bar Point, Lake Erie, as it is a secret among the few who for months have been planning and scheming to make this very thing possible.”
The secret it revealed was to a guarded degree largely promissory in its most attractive features, as were many other of the persuading assurances which plaintiff charges as fraud, overlooking the general rule that fraud must be predicated on statement of existing facts rather than promises.
Attracted by sdme of the company’s literature which he read in the “Palestine Bulletin,” plaintiff visited defendant Pitts at his office in Detroit and “asked him the details of this thing,” which was followed by an interview with the fiscal agent at the office of the Bar Point Land Company in the Free Press building in
Plaintiff visited the property before the lots were staked and made preliminary selection where there were some large trees which he fancied, and, when notified the lots had been staked, he went down again with his wife and made his selection accordingly, but found that these lots and two adjoining lots had been assigned to other persons, whom he ascertained were members of the board of directors, which he testified displeased and made him suspicious, following which he ascertained this tract had been bought of the McBrides for $20,000 by Le Heup, who promoted and helped organize the Bar Point Land Company so that it would purchase the tract from him for $75,000— with other secrets of the Masonic Park at Bar Point which the little book did not let him into.
It is conceded that the Bar Point Land Company had not complied with the law authorizing foreign corporations to carry on business in this State at the time these contracts were made and the money paid its secretary in Detroit. It had established an office and agency in that city, with its fiscal agent and secretary transacting its business. Its executive officers and nearly all its directors were residents of Detroit, meetings of stockholders were held there, and the directors met there as a rule. Its stock book was kept there, and certificates were issued from there by its secretary. No question of interstate commerce is involved, and, without going into further details, it is sufficient to say the testimony is convincing that this foreign corporation was actively and to a large degree carrying on its business in Michigan within the meaning of the law. Neyens v. Worthington, 150 Mich. 580 (114 N. W. 404, 18 L. R. A. [N. S.] 142).
Section 6 of the amended act (Act No. 310, Pub. Acts 1907; section 9068, 2 Comp. Laws 1915) now provides:
“No foreign corporation, subject to the provisions of this act, shall be capable of making a valid contract in this State until it shall have fully complied with the requirements of this act, and at the time holds an unrevoked certificate to that effect from the secretary of State.”
It will be observed that this provision is more stringent than those found in the preceding acts it amends (Act No. 206, Pub. Acts 1901; Act No. 34, Pub. Acts 1903), which only prohibited foreign corporations subject to the law from maintaining actions in this State, on Michigan contracts made by them, until they had
The attitude and evident object of plaintiff in filing this bill was to recover money the defendant corporation owed him, which he claims it had secured in fraud of his rights on these void contracts subsequently repudiated. He alleges in his bill that he tendered back to the corporation his certificate of stock, which vested him with the rights of a stockholder, the receipts for payment on lots, etc., “and demanded a return of his money,” because of the deceit and fraud practiced upon him, thus repudiating the contracts and offering restitution of that which he had received. He did not allege in his bill of. complaint, as ground for rescission and recovery, failure of the defendant foreign corporation to comply with the domestication law. That was apparently an afterthought. The trial court, however, granted his prayer that the contracts be declared null and void and the money he had paid the corporation be returned to him upon that ground, but failed-to find, so far as the. record discloses, that he had shown himself entitled to relief on the ground of active fraud by either the corporation or its directors.
Defendants contend, and the trial court apparently found, that under his repudiation of the contract, by which he would if valid and recognized have been a stockholder, he was not in a position as a stockholder to press a suit iii equity against defendant Le Heup
This brings us to the question of jurisdiction, which the trial court is shown to have only passed upon inferentially. Whether plaintiff asserted right to repudiate the contracts and recover what he paid upon them is predicated upon a claim of active fraud or their invalidity under the statute, he had, so far as this record discloses, a complete and adequate remedy at law against the Bar Point Land Company with which he dealt and to which he paid the money he seeks to recover. Laubengayer v. Rohde, 167 Mich. 605 (133 N. W. 535); Heffernan v. Burns, 175 Mich. 457 (141 N. W. 529); Excelsior Wrapper Co. v. Yund, 176 Mich. 372 (142 N. W. 572); Berger v. Roe, 179 Mich. 184 (146 N. W. 200); Reis v. Applebaum, 182 Mich. 582 (148 N. W. 696); Lannin v. Lynn, 184 Mich. 325 (151 N. W. 645). In such case equity will not take jurisdiction, and this decree must be set aside for that reason.
“If at any time it appear that a suit commenced in equity should have been brought as an action on the law side of the court, or if it appear that an action commenced on the law side of the court should have been brought in equity, it shall be forthwith transferred to the proper side, and be there proceeded with, with only such alteration in the pleadings as shall be essential.”
This provision is, of course, purely a matter of practice and in substance corresponds with new Federal Equity Rule No. 22, adopted by the United States Supreme Court in 1912 (198 Fed. xxiv, 115 C. C. A. xxiv).
Although settlement of this case on appeal was signed by the trial judge November 18, 1916, the decree was rendered and entered October 25, 1915. The judicature act of 1915 did not take effect until January 1, 1916. At the time of the decree, the chancery court had no authority under the then practice to transfer the case, and could only have dismissed plaintiff’s bill of complaint without prejudice; but the bill was not dismissed, jurisdiction was retained, and the case brought here on appeal to be heard in this court de novo, as required in chancery cases. It has appeared upon the hearing in this, court, and been determined, that under the issues involved the suit should have been brought as an action on the law side of the court. The equity court now having authority under the statute to transfer the case “at any time” when it appears such course should be taken, this court will not dismiss the bill, but set aside the decree rendered in the court below and remand the case for further proper proceedings in the trial court.
The decree of the chancery court of Wayne county is therefore set aside, with costs of this court to de
In my opinion the court of equity has jurisdiction to cancel the land contracts, leaving the plaintiff a shareholder in the corporation. The cause ought not to be dismissed.