*1 SPELMAN v. ADDISON. Record—Minority 1. of Court — Discovert —Discretion Stock- holder’s Suit. by minority corporation against In suit of one stockholders majority corporation, holders of a interest in such who alleged, controlling to have held in are interest two other corporations, corporations, and the three motions dis- covery in plead prepare order to and trial properly were denied where fails an record to show abuse of discretion (Court 40, in [1933]). vested trial court Rules Nos. Pleading Sufficiency. 2. — A passing upon liberal sufficiency attitude is taken in pleadings (Court Rule 17, §1; [1933]). No. §1 Equity —Fraud—Facts—Conclusions. The facts which the claim of fraud must is based alleged, conclusions, rather than but it if is sufficient substance alleged. of the transaction and the result Pleading—Sufficiency. 4. Same — In determining sufficiency complaint, of a bill of considera- given tion should be plaintiff’s alleged character of action to such cause and circumstances whether the knowledge records plaintiff facts which the possession largely, in his relies are if exclusively, in possession of defendant. Minority Pleading—Sufficiency. 5. Same — Stockholders’ Suit — Bill complaint by minority holders of a in stock interest corporation against one corporation suit such and two others, alleged all organized buy,, sell, breed, own, to be "to ranch and fur-bearing animals,’’ deal foxes and other against owning individual controlling defendants all corporations, three in which it is other two corporations deplete dissipate used to profits earnings systematic conspiracy corporate statements been insufficient, have incomplete, misleading, allegations inaccurate and with some held, supporting facts, as to sufficient, in view record and allegation concerning operations further faets of all period years over a of 12 require defendants, exclusive control [1933]). (Court Rule No. answer §1 Party Supreme Either to Prevail Court1 —Failure of 6. Costs — *2 Fully. appeal on Supreme in Court are allowed No costs discovery dismissing petitions from orders for bills of fully prevailed appeal. party neither where Sharpe Wiest, disenting part. XT., (Benjamin), Appeal Jackson; Williams J. (Docket October No. 8,1941. Submitted Calendar 41,247.) Decided March by Bill William Grlendene and others against Addison, National Furs, William American Corporation, Addison Furs Inc., Addison Silver Michigan corporations, Black Fox Farms, Inc., accounting, injunction, an for an others and other re- by plaintiffs temporary for lief. Motions receiver by deposition. and order of Motion National American defendant Furs, to vacate appointing temporary receiver vacate discovery. motion Motions to de- dismiss bill fendant National American Furs, Inc., and other de- dismissing complaint, fendants. From order bill plaintiffs áppeal. Reversed and remanded.
Rosenburg, Cristy Painter & Rosen, Adrian D. plaintiffs. Badgley Mclnally, Bisbee, McKone, & for defend ant National American Furs, Inc.
Burney Bailey, E. Brower and Bernard H. for de- Wigle, fendants Addison, Addison Furs and Addison Silver Black Fox Farms, Inc. (dissenting part). appeal J. This an Sharpe, dismissing complaint.
from an order a bill of minority Plaintiffs are stockholders of National they February 13, 1940', Inc. On Furs, of Jackson the circuit court filed a Stanley county Addison, against Addison, William Wigle, American Furs, Reamer W. Corporation, and Addison Black Silver Furs Addison Farms, Inc. Fox complaint, defendant it is
In the bill purposes, organized corporations for similar buy, and deal in foxes ranch breed, own, sell, i.e., fur-bearing animals; that the individual and other principal officers and directors defendants man- have the control and defendant agement Furs, Inc.; National American controlling Addison are also stock- defendants corporations; holders in the other operated a fox founded and Addison had *3 system” plaintiffs “pool the and were farm under originally cept then ac- sold “breeders” and induced to in National American which Furs, Inc.,
stock the plaintiffs given was the were to understand sole owner operator business; the that former organi- previous information without as to until of the other zation shortly filed; was that before the January pro- individual on defendants 25, 1939, Inc., from the American a chat- Furs, cured National security mortgage as $16,302.37 tel for advances claimed s urnsdue defendants to have company; April made to the that on 20, 1939, been procured a second the individual defendants chattel mortgage property of the National American Furs, stated; the amount which is not that procure these defendants intend a default of these mortgages and take over the assets by, mortgages; that the individual foreclosure Corporation using the Addison Furs defendants are instrumentality deplete dissipate the as an earnings profits and of the National American Furs, n Inc.;that officers Addison Furs Corporation Black Fox Inc., allowing identical; Addison are Farms, Silver that the individual defendants are these two corporations, which are owned defendants, these property to take over assets of the National American Furs, as the true owners the busi- ; ness that Addison Furs Inc., claims operating holding company for the National brought Inc.; American Furs, defendants have pretended prime pelts about foxes sales from the National American Furs, Inc., to themselves at prices; insufficient that defendants have refused to any inquiries regard answnr with ; claimed sales systematic engaged plan that defendants are conspiracy to deceive and defraud the stockholders of the National Inc.; American Furs, the annual statements to stockholders of the National American incomplete; Furs, Inc., have been insufficient and corporate that statements of affairs furnished stock- misleading; have holders been inaccurate and acting prevented concert the stock- discussing holders matters concern corporation at meetings their annual stockholders’ through 1939; and that defendants the Addi- son Silver Fox Farms, Inc., and Addison Fur Cor- poration engaged competitive in a business with to its Furs, Inc., loss and detriment. *4 prayer
The bill of contains a for an order ap- and that defendants be ordered to pear produce for examination and their books injunction restraining an records; for the indi- disposing vidual of the real personal property corporation; appointment and for the of a receiver. February petition
On 13,1940, filed
discovery by deposition 41' under Court Rule (1933). information asked for was as follows: Tbe “1. of all business transacted Nature and extent tbe de- all between of tbe defendant fendant officersand directors. ‘‘ accounting following 2. Itemized items: (a) (b) (c) (d) expense. ranch Direct expense. Indirect ranch expense.
Administration and directors’ Officers’ salaries. (e) Livestock. (f) alleged to officers. Sums be due ‘‘ operations 3. Nature busi- and extent of the
ness conducted the Addison Furs Farms, and the Black Fox Inc. Addison Silver equipment “4. real estate, Who title to the personal property? and other “ n were the books of the defendant cor- When porations American particularly the National the books of audit, Furs, audited? Who made the Inc., produced statements said and corporation? the last audit and ‘‘ disposition profits made of the 6. What has been Inc., earned the National American Furs, past years ? ‘‘ Na- returns been filed for the 7. Have income tax the Addison Cor- Furs, Furs tional poration Black Fox and the Addison Silver produce duplicate copy such Farms, years 1935,1936,1937,1938 tax returns for the income ? and 1939 pelts sold, of livestock or “8. the amount State Stanley assigned transferred or ‘ ‘ entry, including original 9. Produce all books register the minute book. the stock mortgages prepared the chattel “10. Who by American resolution ? authorized Was the same livestock Furs, of the National directors the board of Inc., which the meeting at produce the minutes of so, and if passed. resolutions *5 ,v. charge records of the books and ‘‘11. has had Who the Addison Inc., Furs, American of the National Black Fox Addison Silver and the Furs supervision and direc- under whose Inc., Farms, kept? been the said books tion have in- Furs, American Is the National “12. corporations any persons, firms or other debted to any other there debts Are any than the officers? other past ?due bills are such than current bills and defendants show that An order was entered granted and injunction why not an should cause appointed. why temporary not be should receiver February the defendant 1940, 28, On the tem to vacate filed motions Furs, injunction, porary issued; to vacate had been which by deposition; discovery and to dismiss the plaintiffs’ motion alleged in action. The reasons cause of not does that the bill these motions injunction temporary that the action; a cause of state authority jurisdiction court; is without designed complaint is to harass and that the bill management impede corporation; the motion dis of the affairs clearly covery is neces show that does sary scope of the examination the books that the ; by prayed of defendant as and records plaintiffs information which is within the seeks plaintiffs; plaintiffs knowledge have had complained knowledge of the matters of for two years; represent do not own two. cent, capital per outstanding of the Na stock precluded and the Furs, Inc., tional American from making 45 of the such section Michigan general (Act § 327, 45, act Pub. Acts amended Act No. Pub. [Comp. Supp. § 1940, 10135-45, Acts 1935 Laws Stat. 21.45]); § fa- Ann. and that the bill of *6 tally multifarious of its defective reason been made ever demand has and because no any bring the directors to of the or present suit. petition pro- plaintiffs’ for denied
The trial court discovery by papers for books and duction of (1933); deposition 41 complaint. Nos. under Court Rules bill of dismissed also appeal. Plaintiffs production (1933)
Court Rule No. 40 relates to the discovery provides papers. It for the of books and of possession papers of or or documents under may necessary control of the which plaintiff any plead- to enable to declare or answer ings prepare of the and to for trial of the defendant, (1933) discovery Rule cause. to Court relates by deposition. provides any This rule court may, any record in its discretion, civil action pending therein at time before trial, authorize taking depositions opposite party, of the any person opposite party or who for such pleading verified a or an affidavit attached thereto. petition discovery by In the case at bar the for deposition only by attorneys was verified for plaintiffs, petition but the does state that it is based “upon the bill of heretofore filed,” which plaintiffs. was sworn to (1933)
Under Court Rule No.
pro-
if one seeks
discovery
duction and
pre-
documents in order
to
pare
appear
trial, it must be
that the
sought
information
the case
cannot be obtained at the trial by subpoena
duces tecum. Gemsa v. Dorner,
tion framing information essential his seek pleading. explanation of the rule, In that further we case, said: also ‘‘ where defendants have made a This not a case
showing require do not documents pro- purpose claimed; neither it seek the does privileged of ‘confidential communica- duction ’ ‘ expeditions fishing nor is it direct into tions, private papers one *7 (it) may possibility the on dis- * * * liability, on close evidence’ of but the con- abundantly trary, good probable ap- faith and cause pear.” minority urged by
It stock- may compel an of holders not examination books by discovery. of Act No. 327, records § 45, Pub. Acts as No. 194, amended Act Pub. (Comp. Supp. 1935 § Acts Laws Stat. 10135-45, 21.45), provides holding §Ann. that stockholders two cent, per statutory right of entitled stock are corpora- of examination. The above section the of against discovery tion act does militate not under the cent, right court per rules. The under the two clause right in the statute is a of a shareholder an owner inspect the of business to the records of the business, right the but under Court Rule No. (1933) right litigant is the of a whether he is a stock- right holder or litigation, not. One is based on while ownership other the is based of stock. application
The Court Rules Nos. 40 and 41 (1933) largely must rest in the sound discretion of trial the In case court. the at the bar, information books complete require audit
sought would no show- been corporations. There of all three Addison records ing books that the made Pox Black Silver Addison Corporation Purs helpful plain- information contain Farms, Inc., a declaration necessary to file them to enable tiffs trial The the cause. prepare trial for the or to denying as these insofar right the motion was corporations are concerned. two inquiry limited should be bar, at In the case condition of financial to Purs, agreements and reso- together with such But board of directors. into its entered lutions contingent upon rights enumerated above litigants plaintiffs poration in a suit wherein cor- brings to a This us discussion involved. ’ dismissing plaintiffs the trial court complaint. bill of urge been heretofore said the defendants
As has does state cause “eliminating held that The trial court of action. the bare conclusions of from the bill pleader, the bill does not make out a case for the equitable prayed.” relief complaint, a motion to dismiss the bill of
On all properly must facts be taken as admitted. Products, Inc., Marvin v. Mich. 296. Chemical Solventol *8 practice requires encourages “Our neither nor the n repetition allegations. plain needless A and clear constituting wrong statement of the facts the com- plained object sufficient; of is the of the declaration being grounds apprise to the defendant and the court of the pleader’s give
of the claim, to the defendant fair notice of the case he is called to meet. It is neither necessary proper allege nor matters evidence pleading; only alleged, ultimate facts should be Speeman v. them,” prove which tend to Mc- the circumstances Donald v. Hall, Mich. 50. correct in conten- counsel is “The defendant’s his fraud is which the claim of
tion that the facts based alleged, than But rather conclusions. must be it is if the substance of the transaction and sufficient Wagner, alleged.” the 397. 202 Mich. result is Watson £ enough to aver that acts done or intended £It is not complained illegal. acts of must are unlawful The issuably definitely shown, so that if the facts be themselves should legal „the
be admitted
can
draw
party
An averment that a
conclusions.
unlawfully,
showing
did,
acted
an
without
what he
is not
Mobley,
of issuable facts.” Schwab v.
averment
Plaintiffs the state cause of action: January
That on the National American 25, 1939, gave mortgage a chattel sum of Purs, Inc., represents on all of $16,302.37 principal its livestock which corporation asset of the to the individual defendants; have no information as validity made advances the individual company; that all sums earned corporation payment have been used in employees; salaries to officersand and that the funds corporation dissipated. of the have been allegations An examination of the above concern- ing giving mortgage of the chattel noth- discloses ing prohibited A unlawful. director is not loan- ing money corporation to of which he a director may secured for such loan; and it well be earnings were not more enough pay than the salaries of the officers and employees. charge dissipation The of funds is a *9 any specific upon not based It is
mere conclusion. bill of allegation in the complaint. complaint charges paragraph Another employing divers methods are the defendants that for dissipating American the funds mere conclusion. is a statement Inc. This Purs, which such a conclu- no facts There are stated allegation is Another could be drawn. sion Ameri- years the National past the business for the benefit has been conducted can Purs, corporation and that individual allegation paid any is The above dividends. has not give notice of issue defendants fair to insufficient they upon Hall, to meet. See McDonald v. called are pay a supra. Nor dividends sufficient is the failure a or itself for the dissolution of cause in appointment aof receiver. allegations that the are other Other subterfuge deplete earnings being a used as Purs, Inc.; of the National American and that the operated Addison Purs is holding company a for the National Purs, ‘ ‘‘ ‘deplete that the Inc. It true words and dissi- pate” imply wrongdoing, but there are not al- facts leged wrongdoing to show wherein the lies accomplish wrongdoing. manner used the so-called allegations are mere conclusions and Such insufficient basis for cause of action. minutely have examined
We the entire bill of com- plaint it and find that based “information” ” and “belief fortified law fact. conclusions of It does not'contain sufficientfacts from which a court may legal draw conclusions and therefore fails right state of action. cause The trial court was dismissing complaint. plain- the bill of follows It ’ complaint having they tiffs bill of dismissed, been *10 having pending litigants; in no suit cease to be they may power the in not contained court, invoke (1933). Nos. 40 41 Court Rules the trial should be with affirmed, The decree of court costs defendants. questions presented ap- The this J. two North,
peal judge’s denying are: 1. Should the order trial plaintiffs’ discovery motion for be affirmed? judge’s granting Should the trial order defendants’ plaintiffs’ be af- motion to dismiss firmed? Sharpe
Justice has written for each affirmance ground of these orders. On the that the record be- plaintiffs’ fore us the denial does disclose that discovery motion for an abuse was of the discretion trial in vested I concur court, affirmance agree But I affirm- order entered. ance of the am unable to dismissing bill of com- plaint.
Fundamentally the dismissal the bill of com- plaint by ground trial court was allegations largely pleaders conclusions of the allege and did not even sufficient facts or. circumstances, true, taken as constitute a cause of action against defendants or of them. The contents of fairly quite fully the bill of stated opinion though of Justice Sharpe; it should plaintiffs specifically allege also be added that following: further “Plaintiffs state that all of the facts con-
cerning porations operations of all of the defendant cor- period years over last are in possession the exclusive of and under the control of necessary the cute prose- defendants; that it in order to prepare pleadings prepare this suit and the defendants and that had be trial, depositions examined records be their taken. taken years, this Court least, at In recent plead- sufficiency upon passing attitude liberal ings. provided: it is the law side On allega- specific such shall “The declaration .contain reasonably inform the tions will defend.” called he is the cause nature of gen- pleadings (1933). § As Rule No. 19, Court pleadings must erally provided “All rule: it repeti- plain without statement and concise contain a *11 stating pleader in relies facts on which tion of the no others. Court defense, action his cause of or plain- (1933). § 1 In the instant case Rule No. right upon relief based tiffs’ claimed fraud suit defendants. Plaintiffs’ and misconduct of they planted equity on the side of court because injunctive accounting seek an relief. In a case of similar character wherein the bill of application in was dismissed the circuit court on the of we defendants, reversed the order of dismissal and said: upon
“The facts which the claim of fraud is based alleged, must be rather than conclusions, but it is if sufficient the substance of the transaction and the alleged.” Wagner (syllabus), result is Watson v. 202Mich. 397. determining sufficiency
In complaint, of a bill of given consideration should be character plaintiff’s alleged cause of action and to such circum- knowledge stances as whether the records and of plaintiff facts on which the possession relies are his largely, exclusively, possession if not of de- fendant. In the question instant case there can be no very large but that in a measure the defendants, and . knowledge possessed of plaintiffs, the ones not the which circumstances facts detailed of depend. noted As must case merits character pronouncedly is so the case above complaint their allege in their that inability fully their need plead facts, and all the discovery. complaint in the the bill the contents
With opinion of Jus- as are stated instant case such they appear in defend- record, and have been tice Sharpe, required answer; should ants entering an order in error dis- was trial court complaint. missing The case is remanded the bill vacating purpose to the trial court for the proceedings for further of dismissal and therein. fully prevailed appeal party this neither no Since will in this costs be awarded court. JJ.,
Boyles, Starr, Butzel, Wiest, Bushnell, J., J. North, with C. did Chandler, concurred sit.
In re ESTATE OF MILLER.
CLAIM OF McLAIN Upon op Backing Required Car Automobiles — Street —Care Operator. backing upon highways The of an automobile the streets or by law, back- forbidden but a driver who does Ms car ordinary doing a street must it so as exercise care risk of ment, Torts, For requirement causing § 284 and invasion to that actor comment have, interest a; § should another, have, comment knowledge see j. Restate-